Owner Craig Whyte placed the club into administration after Her Majesty’s Revenue and Customs went to court in Edinburgh to force the move on its terms, which would have allowed the government to appoint the executives overseeing the bankruptcy.
Whyte had filed papers on Monday giving him 10 days to decide whether to put the club into administration over a claim by HMRC for as much as £75 million, including penalties involving unpaid tax relating to the use of employee benefit trusts. Rangers yesterday appointed Duff & Phelps as administrators.
Rangers set up the trusts under the previous owner, Sir David Murray, who sold his 85 per cent stake in the club to Whyte in May for £1 in return for Whyte repaying £18 million of loans to Lloyds Banking Group Plc. However, it is the inability of Whyte to fund the club’s business on a weekly basis which has brought them to this stage.
“Today has come as a huge shock,” said Butcher, who played for the Ibrox side between 1986 and 1990. “I’ve been through this 10 years ago at Motherwell and it’s carnage at a football club, it really is carnage. Everybody will be fearful for their jobs and wondering if they are on the list because it’s the grim reaper time, because the administrator can get rid of whoever he wants.”
In a statement on Rangers’ official website, Whyte said: “Due to its cost structure, the club has been loss making for many months. This situation has resulted in increasing liabilities and the club has been in discussion with HMRC regarding these liabilities. These liabilities combined with the threat of the outcome of the first-tier tax tribunal left the club no option but to formally restructure its financial affairs.”
Whyte stressed the administrators would work in the club’s interests. He added: “It remains our firm belief that the club’s future can be secured and we hope this period of administration will be as short as possible.”
Yesterday’s developments promp-ted Murray to break his silence and he expressed “huge disappointment” over the decision. “The timing of the appointment of administrators is especially surprising given two facts. Firstly, there has been no decision, and there is no present indication as to the timing of a decision, from the first-tier tax tribunal concerning the potential claim from HMRC of £36.5 million excluding interest and penalties. Secondly, legal opinion on the strength of the club’s case remains favourable.”
Murray also revealed he had sought clarification from Whyte that he had met his obligations, with limited success, and dismissed suggestions he had a legal mechanism to reassume control under the terms of the sale.
Motherwell-born Whyte, who had vowed to invest £25 million in the playing squad over five years, had been under increasing pressure in recent months to clarify a number of financial issues. The club have still not published audited accounts due before the end of last year or held an AGM as required. That led to trading on their shares being suspended last month by the PLUS Stock Exchange, who are investigating Whyte’s admission that he had been disqualified as a director for seven years from 2000.
Whyte also admitted securing funds, believed to be about £24 million, from loan company Ticketus in lieu of future season-ticket sales, but denied using the cash to fund his takeover. The points deduction means Rangers have all but lost the league title to Celtic, although they still sit nine points above third-placed Motherwell, but it is the long-term viability of the club which will most worry those connected with the club.
In England football debt takes priority over the taxman and other creditors but that situation does not apply north of the border, as clubs such as Dundee United and Dunfermline are discovering to their cost.
