A sum of £24m was lent to the Rangers by Ticketus which hoped to profit from future ticket sales at the club but, according to the administrators, it now appears that this money cannot as yet be accounted for. The administrators have said that that it is possible that the money was paid to a parent company and so they have not been able to track it through the club’s bank accounts.
The administrators have also stated that it appears that Ticketus does not hold any security over the clubs assets. Ticketus will therefore be an unsecured creditor ranking alongside HMRC who have a £9m claim for arrears of tax and a potential claim of up to £75m which stems from the way Rangers paid their players going back 10 years. This claim is due to be determined by a tribunal.
So what are the options for Rangers and will Ticketus and HMRC get any of their money back? We note with interest that one possibility that is being looked at is for the club to exit the administration by way of a CVA. This will allow the club to continue to operate while paying back a proportion of the debts to unsecured creditors.
A CVA is really the only insolvency process with sufficient flexibility and power to ensure the clubs survival in its current form. However, a CVA will need to be approved by 75% ( by value ) of the unsecured creditors to become binding. Until the exact debt to HMRC is determined then any rescue plan will be put on hold. In the interim, the Administrators will need to ensure that the all of the club’s running costs are met including the payment of tax liabilities. This will be no mean feat given the club’s recent track record.
Is Rangers too big to fail and would Scottish football be able to survive without Rangers? This is something that even the Scottish First Minister has questioned!