Rangers 'should have sold Ibrox stadium after going into administration'

Lord Tyre ordered that Rangers administrators, the firm Duff and Phelps, must pay £3.4 million in compensation to the liquidators BDO who had originally sought £47.7m plus interest and legal costs.

The judge heard 16 days of evidence and issued a 125-page judgment.

This judgment concluded with Lord Tyre’s verdict that Duff and Phelps, for whom the main administrators were Paul Clark (below right) and David Whitehouse (below left), should compensate BDO for the loss of chance of sale of marketable players (£977,500); the loss of chance of sale of Steven Naismith (£827,000); the loss of chance of lease and sale of Ibrox Stadium (£750,000) and the loss of chance of sale of Murray Park (£850,000) giving a total of £3,404,500.

The club’s assets were eventually sold for a reported £5.5m to Sevco, the entity created by Charles Green. BDO say that the administrators failed to make non-playing staff redundant (£971,386); failed to make playing staff redundant (£443,546); failed to market playing staff at a salary saving of £570,595; failed to market playing staff with a sale value of £19,704,883 and failed to obtain a higher price for the business - which BDO said cost them £25m.

In his judgement Lord Tyre wrote: “The noters [BDO] invited me to conclude that the respondents lost a real and substantial chance of securing a total amount that was around £25 million more than the net figure paid by Sevco for the company’s business, either through an increased bid that took account of the heritable property or by realising the heritable property separately if no bidder would pay that amount.

READ MORE: Rangers administrators criticised for not selling off Ibrox as part of a club 'break-up' sale

“I am unable to reach that conclusion. In the case of the heritable property I have held that the noters are entitled to compensation amounting in total to £1.6 million based upon the loss of a chance principle.

“In respect of the other alleged failures, I have found no breach of duty established. It is certainly the case that the price achieved for the sale of the company’s business and assets was much lower than the expectation of the respondents at the outset of the administration. It was equally disappointing by comparison with the level of the initial expressions of interest received.”

Lord Tyre has compiled an exhaustive account of the sale and administration of RFC 2012 plc, whose former name was The Rangers Football Club plc.

Former owner Craig Whyte (above) had bought control of Rangers from Sir David Murray for £1, but he faced two tax cases brought by HMRC and it was largely as a result of the probable liabilities that he put the club into administration in February, 2012. Creditors, principally HMRC, would not accept a voluntary agreement and BDO were appointed liquidators at a creditors’ meeting on December, 2012.

Meanwhile Rangers had continued to play at Ibrox and train at Murray Park, after Charles Green stepped in with Sevco. They were forced to compete in the Third Division and work their way back to the top of Scottish football, which they achieved earlier this year by winning the Scottish Premiership.

READ MORE: Ex-Rangers administrators David Whitehouse and Paul Clark in £21m settlement

Lord Tyre concluded that the administrators should have made players redundant and should have engaged an agent to market the most valuable players.

He wrote: “Even with the (modest) player redundancies that I have found could have been made, the playing squad would have remained sufficient for the club to fulfil its fixture obligations for 2011-12 and, if necessary, to continue to do so in the following season.

“If an agent were to be engaged on the basis of a success fee, there would have been little or nothing to lose by attempting sales. On the other hand, there was a real risk that the value of some or all of the players would be lost altogether.

“Although the prospect of a sale of the business and assets instead of a CVA does not appear to have received public attention until about the beginning of April, it was a possibility to which the respondents were or ought to have been alive from the outset, given the stated preference of HMRC for a creditors’ voluntary liquidation.

“The eventual outcome, in which some of the most valuable players declined to transfer to the Newco, was reasonably foreseeable, even before the SPL Board resolved to pass to its members the decision on whether to allow the company’s SPL share to be transferred to Sevco. For these reasons, I am satisfied that the respondents were in breach of duty by failing to engage an agent to attempt to realise the value of some of the club’s top players.”

Charles Green, former Rangers director Imran Ahmad, Paul Clark, David Whitehouse, and their colleague David Grier suffered malicious prosecution by the Crown Office and have received or will receive tens of millions in compensation. Craig Whyte stood trial for fraud but was acquitted.

There is to be an inquiry into those malicious prosecutions.