Leave to Appeal

The decision by BDO to seek permission to appeal a unanimous decision by the inner court of the Court of Session has come as a surprise to many observers. I note that some Rangers supporters are celebrating a temporary reprieve from calls for title stripping. Their celebrations are premature. Prior to petitioning the Court of Session for an appeal  to The Supreme Court, the joint liquidators must have their case for appeal reviewed by two QC to determine whether they have a case. Should senior counsel form the opinion that a legal anomaly, supported by a case precedent, exists then two signatures will allow the petition to proceed.

The biggest hurdle then is convincing three judges that three of their colleagues erred in their decision. In this case the specific issue is whether common sense is a sound basis to form a conclusion. I take the view that if this is their only ground for appeal it’s unlikely to be supported by two senior counsel.

No more than a dozen or so cases from the Court of Session are referred to The Supreme Court per annum. The majority of these were referrals on majority decisions, where there is no need to seek permission. In 2012, there were 12 referrals. Only Four of these were successful. In 2011 there were eleven referrals with six upheld. In 2010 there were 9 referrals, five of which were upheld.

If the Inner Court come to the conclusion that there is no right to appeal, their decision is binding. This draws a line under the matter.

 

Style over Substance

Can anyone think of a better way to prepare for a contempt of court hearing than Keith Jackson’s revelations of more details of the confidential Rangers Retail agreement?  A cynic might suggest that Mr Jackson is doing his utmost to ensure that Mr King is residing at Her Majesty’s pleasure  on December 9. Maybe Mr Jackson fancies a trip to London next week for some Christmas shopping. What better way to justify his expenses than a front page splash of King substituting his Terminal 5 boarding pass for a Group 4 transit to HMP Brixton?

On balance, Mr King’s imprisonment might be the best result for Rangers. The alternative, a substantial fine, would fall due to the club. A court fine cannot be ignored with the impunity that the board have reserved for the Smith commission fine. The SPL fine will no doubt be perceived by Mr King as the cost of doing business with Rangers. If Neil Doncaster wishes to sell four Old Firm games next season, the least he can do is swallow this fine. It’s the same amount he swallowed to incite ESPN/BT Sport to cover fifteen Rangers games per season.

As is the custom with Mr Jackson’s articles, some of his output is lifted directly from Phil Mac’s articles. His reportage of an Ashley conclave with his consiliere was not lifted from a Mario Puzo novel. Its actual origin was the more prosaic setting of Donegal. If Mr Jackson had been looking for a scoop, he could have made reference to Mr King’s use of  ‘oak tree.’ This was a threat to back off from the establishment.

Mr Jackson reveals that Mr King has spent £8m. This is inaccurate. £8m has been expended by others on behalf of King. Our career criminal chairman’s shares and lavish expenses are being paid by others. Mr King is getting a free ride. He will not be contributing to the £5m if this sum is actually raised and paid, nor will he be contributing  to the £2.5m to keep the lights on in December. This leads to an obvious question. Who was prepared to risk £15.5m on Rangers?  When vying for control King’s concert party offered £6.5m. With their share purchases,their expenditure is £10.5m, £4m more than their budget. Of the six names offered by King we can immediately discount our chairman and vice chairman who have no appreciable wealth. Did John Bennett arrange a financial instrument to raise £5m which will be secured, as is the case with the Ashley loan, on the assets currently under warrants to Sports Direct? If this is the case, the financial position of the board is much worse than many would have anticipated.

Mr Ashley will not lose face to a penniless spiv like King. King’s symbolic rhetoric will be a red rag to Ashley’s bull. The AGM was a triumph of style over substance.

Just like Mr Jackson’s reportage.

Ashley will not fix it for King

I’m delighted that Bill McMurdo has made two contributions to this site. I trust that all those who value his judgment, insights and experience, as I do, will join me in welcoming Bill.  Bill made the point that ‘the fix is in.

The most obvious first port of call is the SFA. In anointing King and simultaneously fining Ashley, they nailed their colours to this pirate’s mast.In August 2013, King was convicted, in a criminal court, of 41 convictions for breaches of South African tax law, all of which were liable to imprisonment for a period of two years. King unequivocally was  a director of a club in membership of a National Association within the five-year period of such club having undergone an insolvency event. There is also the not insignificant fact that King is on licence for a three month prison sentence for contempt of court. Despite these forty-three compelling reasons against King’s appointment, Regan, Doncaster, Ogilvie ,McRae and Johnston, in a hastily arranged quorum of eight (with one member observing) voted for King. The opposition of Petrie and Lawwell was no more than a footnote to a conspiracy where Stewart Regan was the ring-leader. Regan, who had five votes in his bag prior to entering the boardroom, invoked the SFA’s infamous ‘discretion as to whether or not an individual is fit and proper.’  The fix was in.

Stewart Regan, in my informed opinion, is not only the kingmaker at Rangers, he effectively reports to any incumbents of the blue room. The following is an email from Andrew Dickson (Head of Football Administration ) to Ali Russel (Chief Operating Officer) with a cc to Craig Whyte, from 7th December 2011:

“Regarding Rangers getting a license for next season (following email from Stephen Kerr to Andrew Dickson and Carol Patton) – enclosed email from Stewart Regan.”

Regan: “Further to my discussion yesterday with Andrew on the matter of Rangers FC’s European license I would like to release the following statement. In light of persistent speculation across all media, the SFA would like to clarify the position in regard to RFC’s license to play in Europe as governed by Article 50 of the UEFA regulations. It is noted from the report submitted to the Licensing Committee of RFC’s advisers Grant Thornton UK LLP, dated 30th March 2011 that ‘All the recorded payroll taxes at December 31st 2010 have, according to the accounting records of the Club, since that date been paid in full by March 31st 2011, with the exception of the continuing discussion between the Club and HMRC in relation to a potential liability of £2.8m associated with contributions between 1999 and 2003 into a discounted option scheme.’ These amounts have been provided for in full within the interim financial statements.Since the potential liability was under discussion by RFC and HMRC as at 31st March 2011, it could not be considered an overdue payable as defined by Article 50.

Craig Whyte in his response to  Andrew Dickson (cc Ali Russell) on the same day,7 December 2011, stated:

It would be crazy for them to put this out.

On the same day,  Ramsay Smith wrote to  Stephen Kerr( now at Level 5) Carol Patton and Ali Russell :

We should put some pressure on the SFA from a high level, from Ali or Andrew, to say we do not believe this is a good idea they put out such a statement.  If they persist they will only cause issues for themselves as much as Rangers.”

Ali Russell to Stewart Regan, Andrew Dickson (cc Ramsay Smith, Stephen Kerr) – Dec 7th 2011:

We would prefer no comment or the following: “We have looked at this matter and there is no issue with the license granted to Rangers from the SFA.

Internal RFC Communication from Ali Russell to Craig Whyte, Andrew Dickson, Fiona Goodall (cc Ramsay Smith, Stephen Kerr, Gary Withey) – Dec 7th 2011:

All sorted. Held until further notice and I have agreed we will meet Stewart and Campbell for dinner in the next couple of weeks to discuss bigger issues.”
Dinner was duly served to Campbell Ogilvie, Stewart Regan and Craig Whyte at 19:30 hours on December 20th 2011 at Hotel du Vin in Glasgow. It is alleged that Craig Whyte recorded this conversation using a specially equipped pen.

Note that I have highlighted in bold Mr Smith’s statement in regard to should the SFA persist they will only cause issues for themselves as much as Rangers. These issues will come to light in the trial of Craig Whyte, Green and four others which resumes on the 8th December. Craig Whyte has 80,000 pages of incriminating evidence. Police Scotland have all the Charlotte Fakes material. Stewart Regan knows that a tsunami of information exhibiting his collusion with directors past and present at Rangers will be presented in this trial. He is hoping that reporting restrictions are strictly enforced.

However the Ashley trial, now scheduled for April, is unlikely to be swept under the carpet of reporting restrictions as it’s not a trial by jury. King  was summoned to the meeting at the SPFL. I would not be surprised if Stewart Regan patched into this meeting via conference call. King was told in no uncertain terms that if his board persisted in refusing to repay the £5m it would cause major issues for the SPFL and the SFA, which would in turn cause major issues for Rangers. King was told in no uncertain terms to make it go away.

There are a lot of red herrings in the SMSM about Ashley exercising the ‘nuclear option’ of calling in the receivers. This would be a poor business decision. As long as Rangers continue to operate, they generate merchandising revenue. As we have found out, in yet another breach of the High Courts injunction, the seven year notice period will not initiate until all outstanding debts are paid, including the £5m loan.

The £5m offer is conditional upon Ashley withdrawing from all litigation in regard to RIFC and the SFA’s fit and proper determination.

King told us as much. Rather than a quick call to David Forsey at SD with the offer, King stated that it would be handled by solicitors. Ashley will not agree to these conditions. These conditions include his withdrawal from raising injunctions to stop the misappropriation of equity.

As I stated in a previous article it is a bluff by King. He knows full well that Ashley will not agree to his terms. King was playing to a rapt audience at the Clyde Auditorium and Hampden.

I anticipate that the next time we will be hearing from Mr King will be at his trial on December 9. Adam Lewis QC now has both the Sky tape and Saturday’s Daily Record article. It will be a slam dunk for Lewis.

As Regan has told King in words with a minimum of syllables:  how can he possibly defend his approval of him as fit and proper if he is sent down on the 9th December?

 

King’s Bluff

There is a perfect paradox at the heart of Gary Ralston’s piece in the red top rag that is best viewed online. Mr Ralston has now disclosed that the seven year notice period can only be initiated once the £5m debt has been repaid. That’s yet another breach of a High Court order. The stupidity of this board never fails to amaze me.

There appears to be some confusion in those who take the time to contribute on this site. First of all there was no interest on the £5m loan as specified in the RNS to LSE AIM. No-one, not even Phil Mac, has access to any penalty clauses that may exist within the agreement. The current board are in breach of the agreement. Ashley gave the board one final chance to repay their debt in June. This eleventh hour offer of £5m will fail. King and his board know that they are in default and know that the IP has gone. This is a desperate attempt to get back to the negotiation table.

It’s a very clever PR exercise, but it fell over when King added Murray’s name to the list of the £5m saviours. Mr Murray has been an abject failure as Vice Chairman. He has delivered nothing and his botched attempts to negotiate with Ashley has led to the current impasse. He is a failed entrepreneur with no appreciable wealth. King as everyone knows, has not risked one South African Rand of his own money to acquire shares. The £1.5m loan attributed to King was a barefaced lie by Paul Murray. In April, if not before, the source of the £1.5m will be revealed in court. King and Murray’s lies to shareholders will be exposed.

Mike Ashley will not rest until King and Murray are removed from office. He has unleashed a tsunami of legal action. The board are drowning, hence their desperate attempt to construct a £5m life boat. The opportunity for negotiation ended in June. Going forward, everything will be decided in court.

King contradicted himself at the AGM. In one breath he said ‘once we raise the £5m‘ and in another that ‘it was in place.’ There is no £5m. It is not in our Metro Bank account. King is bluffing and when negotiations break down he will have given the shareholders a sense of his acting in good faith, with Mr Ashley not prepared to compromise. It’s a clever bluff. The last throw of the dice prior to King’s contempt of court hearing.

James Blair, who has no training in English tort, expressed the opinion of someone who would be perceived as a layman in The High Courts of Justice. If the Chairman, David Somers, was authorized by his Chief Executive, Derek Llambias, and Financial Director Barry Leach, then that’s the end of the argument. If challenged in court they will affirm their assent. Sandy Easdale, who was Managing Director of  The Rangers Football Club plc, was required to sign as the floating charge has an impact on TRFC plc. If this is the best argument that they have to breach the injunction, they will fail.

King has the SMSM eating out of their hands. I wonder who will be first to break the story of Ashley’s intransigence to King’s ‘good faith.’

More thoughts on AGM

Prior to writing this article it’s worth pointing out that this site achieved an important milestone today. I broke through the one million hits barrier.Visitor numbers are in excess of 202,000, likes are 193, with approved comments slightly north of 2,500. I noted a twitter exchange this evening where Gordo RFC’s comment today was discussed, proving that those who comment here have a voice.

When King stepped off the stage at The Clyde Auditorium, television crews caught up with him to ask the questions most of us wanted answers to. The first question was who specifically would be providing the £5m. King stated himself, Douglas Park, George Taylor, George Letham, Paul Murray and John Bennett. The latter joined the board on 10 March, but his appointment was overshadowed by Je Suis Graham’s forty-eight hour game of snakes and ladders.

The maximum King could invest without transgressing exchange control regulations would be £462,000. Given that this is half his last known liquidity, and that he lied about buying shares and providing a loan(a £4m lie) then King having skin in the game should be quickly discounted. How much could Paul Murray bring to the table. It’s hard to say. His school is a registered charity and his business has never turned a profit, but that would not deter him or fellow director Martin Bain from awarding themselves emoluments. I doubt whether he could raise any more than £250,000. The three bears would be good for £1m each, with the £1.75m balance falling  due to Henderson’s Director of European Equities, John Bennett.

The second question was why now after their spirited resistance at the EGM in June. King stated that conditions had changed, but that he could not discuss specifics. Ashley’s litigation has taken its toll. The threatened injunctions, should they choose to allot shares at their discretion, would be so destabilizing, prohibitive and expensive to litigtate against that the board were compelled to act. With £2.5m in a soft loan being attributed to the three bears, my estimate of their soft loans is circa £9.25m, which they want to be converted into equity. Funding from Rangers First CIC, which will keep the lights on from January until May, is also predicated on the disapplication of preemptive rights. Ashley could breach this much needed liquidity pipeline with injunctions. It is not the right thing to do, it’s the only thing they can do lest their house of cards collapses.

However, there are two other scenarios to consider. King could be lying. It would be an understatement to point out that he has previous.King stated that negotiations would be conducted by solicitors. King’s solicitors could obfuscate, delaying  the transfer, of assets for funds, long enough to slip the bulk of his equity deals through under the cover of detente.

I could also be persuaded that the £5m might not be enough to release the assets. SD would want all their debts paid prior to releasing the assets.

King’s meeting with the SPFL is also significant. Doncaster and Topping are both represented on the SFA’s Professional Gaming Board. They may have impressed upon King that they want Ashley’s litigation to end and that if he did not pay his debts, his approval as a director would be rescinded.

The answer to this riddle can be found in Ashley’s litigation and the involvement of Scottish football governance.

 

 

 

The AGM

The most surprising aspect of the AGM is the humiliating climb down by King and his board from ‘holistic review’ to full repayment of the Sports Direct £5m loan. We know that King played no part in raising these funds. King has been backed with £4m of loans, with the provenance of £1.5m of this not known. King stated that once SD loan has been paid off, and I quote “We will be one of strongest clubs in world with regards to financial position.”

This statement does no square with the accounts, where we made a trading loss of £7.5m and are currently getting by on soft loans and finance leases. Despite being in this enviable financial position, no bank is prepared to offer us an overdraft facility. The reality is a foreign country to our career criminal chairman.

So why the sudden change in the board’s position? The simple fact is that Mike Ashley is the gatekeeper to the equity release. King stated: “Those providing soft loans are doing so as equity substitute. Not really a loan. They won’t be repaid. They will be converted.”

Perhaps someone should draw Mr King’s attention to the fact that should resolution 10 achieve its 75% majority, as I fully expect, Mike Ashley is on record as stating he will raise an injunction to block any equity release. This is the crux of the board’s position. Ashley will not back down. He will not agree to any conditions for the repayment of his £5m. King will be taken to court on Contempt of Court proceedings on 9 December and his status as ‘fit and proper’ will still be challenged on the 28th April of next year. Ashley won’t accept the £5m as an olive branch, or an ‘oak tree‘ to use King’s turn of phrase. Ashley smells blood and he won’t stop until King is removed from the board. Ashley has lost face. King and Murray breached a confidentiality clause. Everyone in the business world knows of the seven years termination clause in the Rangers Retail contract.

King was asked about whether he had any information in regard to a BDO appeal to The Supreme Court. Given that both liquidators are regular guests at Ibrox, we can assume that this avenue will not be explored, as per my numerous statements on the matter. At this point we discovered why King had met with Doncaster on Wednesday. Mr Doncaster was informed, with robust rhetoric, that Rangers would vigorously resist the clamour for title stripping. James Blair went further stating that there was no legal case to do so. The fundamentally flawed Smith report will be used by Doncaster to resist any attempts to strip titles. Doncaster needs Rangers to sign up to the SPFL’s broadcasting arrangement. If Doncaster does not do as he’s told, there is a tacit threat that Rangers will negotiate their own broadcasting deal. This broadcasting deal will not include WI-FI at Ibrox. Despite being one of the strongest clubs in the world, we cannot afford to repair our WI-FI provision.

King informed the audience that Ashley no longer had naming rights to the stadium with no wi-fi facilities. He confirmed that 40% of turnover would be spent on players payroll. This is £6.6m, the second highest outlay in Scottish football. King also dismissed Green’s court case for costs. Questions by Craig Houston and Ricki Neil were evidently agreed in advance. The latter, who will play a prominent part in Rangers First CIC, asked how best he could give Rangers money? Mr Neil was not asking for equity in lieu of cash. He was talking about a gift. As I stated in my previous article this is the gift that keeps on giving.

John Gilligan had a pop at Phil Mac Giolla Bhain, thus: ” When you get people in foreign countries writing lies about you, it’s very disturbing.” If this is the case, why does one of the strongest clubs in the world, with a company secretary who works for Anderson Strathern, not sue him for libel?

King stated that: “What can be said is clearly club will welcome all contributions from fans. Every pound counts.Support essential in what has been a difficult and traumatic year for the club.

This contradicted Gilligan’s statement. Phil Mac has been highlighting the difficulties and trauma. Gilligan evidently takes issue with the details but as King confirms, not the overriding message.

We are led to believe that Douglas Park. George Taylor and George Letham have managed to cobble together the lion’s share of the £5m. I wonder how much our fourth bear, Ricki Neil, has contributed to the £5m?

No-one challenged King on the fact that he has not contributed one single penny to ‘The Rehabilitation of Rangers.‘ No-one challenged King on the expense of fighting legal battles due to his corporate malfeasance and stupidity.

Craig Houston made a pitch to fans to buy non SD goods. Craig Forsey of SD will be keeping a close eye on any transgressions of the IP until such time as the loan has been actually paid. An individual suggested creating a fat effigy of Ashley, to establish whether voodoo worked. There was praise for removing the ‘rats‘ from the boardroom. As this includes Mr Llambias and Mr Leach, it will do little to assuage the concerns of Mr Ashley.

I would not be surprised if Mike Ashley now redoubled his efforts to teach these shareholders an expensive lesson.

 

 

The Gift that keeps on giving

Today’s Annual General Meeting will be a tame affair. There will be no challenges to the re-election of the current board. Resolutions 1-9 will pass on a simple majority. Resolution ten will almost certainly be passed unless Ashley and the Easdales choose to oppose it. Irrespective of whether it passes, its scope has been stymied by legal action. Should King attempt to convert the £3.75m of soft loans to date into equity, Ashley will raise an injunction in court to arrest their shares heist.

There will be a vote to back the auditor’s report and a tacit backing of the company executives who prepared the report. In any other business with no overdraft facilities, a £7.5m loss would lead to a vote of no confidence in the board. However, no-one will raise an eyebrow at the onerous finance leases required to offset these losses.

Despite the abysmal financial results, no-one will question whether the business is a going concern.The company meets its day to day working capital requirements through existing cash facilities, shareholder loans
and finance leases. The latter handle long-term debts. The cash, after yesterday’s payroll run, is more or less exhausted.  £2.5m is required every month to put a team on the park. As the season ticket income has now been expended, an obvious question at today’s AGM would be how the shyster board have come to the conclusion that the business is a going concern. Can the board meet its financial obligations as they fall due?

There were a number of key assumptions in November’s financial report. The financial forecast identifies the need for £2.5m by way of debt or equity funding by the end of season 2015/2016. Should Rangers gain automatic promotion, the end of the season is only five months away. Any equity funding would be at the discretion of Mike Ashley, and given his disposition to King and Murray, if both are not removed as directors, he will raise injunctions to put an end to this avenue of funding. The following is a quote from November’s financial report:
“The Board of Directors has received undertakings from certain shareholders that they will provide financial support
to the Group and have satisfied themselves as to the validity of these undertakings and that the individuals have
the means and authority to provide such funding as and when it is required.”

Note the latter part of the statement in regard to ‘authority.‘ Therefore by certain shareholders they effectively mean Rangers First and The Rangers Supporters Trust, who will be combined to form Rangers First CIC. The latter which is supposed to be an independent arm’s length organisation has provided assurances to the board that they will loan them a minimum of £2.5m prior to any appointment to Rangers First CIC’s board.

The idea of elections to the CIC board is a sham. They have already been identified and shown a willingness to use the money in their care to give the board an unsecured loan. The board cannot even imply that equity will be transferred at a later date, as this would be in contravention of their undertaking to the court of session.

Any loans from Rangers First CIC will effectively be gifts. Those who believe that giving a career criminal a gift is a sound idea should not be leading any supporters share trust. The next time King flies first class to Johannesburg, I suggest one of the anointed executives of Rangers First CIC travel, in coach, to the career criminal’s adopted home. I would urge them to arrange an appointment with any retail bank ,point out that they plan to give King a gift of many millions, and whether they could vouch for him. After they had given the CIC emissary an account of the various alleged frauds King has engaged in. and managed to avoid imprisonment due to spending £50m in legal representation, our emissary may choose to visit Umgeni Water and ask how their pension fund was misappropriated by Greg Morris on behalf of King.

There is evidence of this board’s inability to raise money closer to home. No bank will offer them an overdraft. Therefore Rangers First CIC will be the bank to RIFC and unlike any other bank will keep giving with no security and no return. The following is a statement by the board to confirm my assertion:

“After making the enquiries referred to above, the Board of Directors believe that there is a reasonable expectation that the Group will at all times have adequate resources to continue in operational existence for the foreseeable future.” 

Rangers First CIC will be the gift that keeps on giving. The three bears have spent £8m to date. They have given King a loan of £2.5m – £4m. King is taking everyone for a ride and a large part of the £2.5m first tranche of the CIC gifts, will be spent keeping him out of prison.

When the Parks, Murray and Gilligan back their chairman’s re-election today, they will do so knowing that they have £2.5m -£4m invested in him. They will not be overly concerned about the costs of defending King on the 9th December. That’s Rangers First CIC’s problem.