A very good post so borrowing, hope it ease some folks minds Hi Guys, Im just coming on to correct allot of the nonsense I am hearing in the media and even from Craig Whyte. I still think a CVA will be how we get out of our current situation, but if we lose the Big Tax Case and the HMRC refuse to do a deal on a CVA then we will be left with the NewCo solution. I have done quite a bit of research into the previous cases of NewCo situations. I will explain two UK examples, Leeds United in depth, and I will touch upon Luton Town. Fiorentina are also a good example, but the difference in insolvency laws give the tims far to easy a get out, even if it has no basis. Im sure what I mention here will not be news to all of you, but the devil is in the detail. If we do go down the NewCo route, the media will go for the headlines and proclaim we have died. Its not true. Firstly the club cannot liquidate. The club is a business. Only the company that the business sits within can liquidate. In the event we are ever served a winding up order, the assets of the company will be sold prior to the company being labeled as 'liquidated'. The club is the key assets of the business and the all important 'goodwill' (trading rights if you like). As long as these are bought by someone who wants to carry on the club, it can never be claimed to have been ended. It does not matter if the transition to a NewCo happens before the company ever goes down the liquidation path, or if the club is transfered out of the company 5 minutes before the company is declared 'liquidated'. It is legally the same. Anyway, back onto the precedents set in the UK. ************************************************** ************************************************** ************** Leeds United Leeds United FC (club) belonged to Leeds United Association Football Club Ltd (Company, founded in 1920). On 4th May 2007 administrators KPMG were appointed as the administrators of LUAFC by the directors out of court under Insolvency Act 1986, Schedule B1, paragraph 22. LUFC were docked ten points and were relegated to League One. The administrator quickly agreed to sell the business, for an undisclosed sum, to a newly formed company called Leeds United Football Club Ltd (company number 05765697) (Directors – K. Bates, S. Harvey and M. Taylor). The administrator had received bids from other parties but had decided that Bates' offer was the best option for the creditors and LUFC. The administrators proposed a CVA based on this offer and called a creditors' meeting in which the creditors would consider the offer and decide whether to approve it or not. If the CVA was approved this would comply with the FL's insolvency policy which states that a football club which is in administration must exit administration via a CVA. On 1st June 2007 Bates' offer was narrowly accepted at a stormy creditors meeting. Bates needed 75% of creditors in value of the creditors present, in person or by proxy, and voting to accept the proposed CVA. He received 75.02%. A recount was ordered due to the extremely narrow acceptance. There were no reports of a meeting of the clubs members being held. The CVA proposal was approved by the recount as 75.2% of creditors had voted in its' favour. Therefore as long as there were no challengers to the CVA acceptance in the statutory 28 day period and the FL approved the sale, the sale would be complete. The FL's approval was required in order for the ‘football share' to be transferred back to the new company which would hold LUFC. On the 3rd July 2007, one hour before the end of the 28 day period to challenge the CVA, HMRC lodged a challenge to the CVA “based on procedural matters relating to the way which KPMG conducted the creditors' vote”. As a result of this, the administrators announced that they would be putting the club back up for sale on the 6th July 2007. This was due to the fact that the legal challenge would have stretched into the pending football season and LUFC may have been prohibited from starting the season whilst the club was in legal turmoil. The CVA challenge of HMRC was avoided due to the club being put back up for sale. The Football League announced that Leeds could start the new season (the 2007/2008 season in the FL League One). On the 8th of July Bates stated that he would take legal action if the club was sold to a rival bidder. On the 11th July 2007 the administrators announced that they had sold the club to Newco (Bates' consortium) for an undisclosed sum. It was unknown how much of the club's debt Bates intends to pay off. The club's administrator stated “The approved deal represents the best result for creditors in the circumstances and we believe provides the club with the best chance of survival”. On 3rd August 2007 the Newco was transferred the ‘football share' for LUFC by the FL, allowing LUFC to start the season. However, the FL gave LUFC a fifteen point deduction as they had failed to come out of administration via a CVA. Thats right, the club was safe and out of administration without the agreement of a CVA. http://www.telegraph...-deduction.html After Leeds were granted their 'Golden Share' and allowed to re-enter the same tier of the league structur, the game was up for HMRC who had lodged an appeal to block the CVA. They were no longer any threat to Leeds United FC (club) who were safe. HMRC dropped the appeal and the CVA was paid out. Leeds United Association Football Club Ltd (Company, founded in 1920) was then placed into liquidation. ************************************************** ************************************************** ************** Points to note. Leeds biggest threat in this period was the fact that the Football League set up in England has a insolvency policy, which states that a club should exit administration by use of a CVA. Under normal circumstances, the 'Golden Share' (league membership) will be withheld until the CVA has been arranged. The football league used its discretion to decide not to withhold this share. In Scotland there is no requirement to exit administration via a CVA to regain entry to the league structure. We are not in danger here. We will be granted entry back into the Scottish Leagues, most likely into the SPL even if we are a NewCo without a CVA. Celtic fans try to associate agreeing a CVA with keeping our history. It is not true. There is no legal basis to this claim. As long as Rangers FC (club) exists in some company, then our history is retained. The only thing required to allow this is that someone at some stage buys our 'Goodwill' and starts a football club under the name of Rangers FC. Most likely this person will be the person with ownership of the key assets such as Ibrox. http://www.lawteache...inistration.php ************************************************** ************************************************** ************** Luton Town Football Club To be honest guys, I will leave you to do your own research on this one. The key things to note for this case is that the events are almost an exact replica of what happened with Leeds before them with one difference. It is a very small difference that has no legal impact, but it will no doubt throw a spanner in the works of the Celtic fans. Luton Town FC did not exit administration with a CVA, they moved to a NewCo prior to liquidating the old company. The difference between Leeds and Luton is that Luton never agreed a CVA at any stage. Luton still retain their history. Trust me, this little detail has no legal impact, as soon as the club was sold it was safe, but it will be very useful when discussing with celtic fans. Apologies to anyone who is angered by the very mention of liquidation, but I thought I would just try and explain what our situation would be if the HMRC play hardball. Remember, it is impossible for the club to be liquidated. The club is more than the company its sits within. Liquidation is only a process which can be applied to a company. Anyway, this must be a record for a first post! Feel free to pass this round to anyone who might be interested.
