Rangers plan for administration
In a shock development Rangers have lodged papers (termed 'a paper of part' in Scottish law) with the Court of Session in Edinburgh signalling their intention to place the club in administration.
A decision is imminent from a tax tribunal involving the club relating to employee benefit trusts. Losing the case could cost them £49m. However, it is unlikely that they have had advance notice of the club's decision and it is more likely that the move represents contingency planning.
The club now has five days to confirm whether administrators have been appointed to take over the running of the club. This would allow a few days for negotations with Revenue and Customs. The tax authorities could lose out if owner Craig Whyte chooses to collapse the club.
If the club is formally put into administration it will automatically receive a 10 point penalty from the Scottish Premier League. This would put Rangers 14 points behind Celtic.
A statement issued by Craig Whyte on Monday evening clarified his intentions. He said that from his very early days he had seen administration as 'a very real option' for the club. In his view 'the case for administration in pure financial terms was compelling.' The club was running a £10m annual deficit and it was in its best interests to cut costs significantly.
Revenue and Customs had made it clear that if the forthcoming tax tribunal decision went the way of the club they would lodge an appeal. This 'would leave the club facing years of uncertainty.' Having sought advice from a specialist restructuring practice, he had decided to seek a moratorium from the tax authorities by making a Company Voluntary Arrangement (CVA) proposal to creditors. Mr Whyte is understood to be the club's main secured creditor.
If the club went into administration it would have to come out in a month or so in order to be able to play in Europe next season. Administration would 'regrettably lead to a cost-cutting programme and the potential loss of jobs across the business.'
If a CVA cannot be secured Mr Whyte could pursue other avenues such as receivership or pre-pack administration to satisfy the debts which the club owes him. In that event is likely that the nearly 140 year history of the club would come to an end and it would be formally wound up.