Rangers Football Club Plc faces liquidation after the U.K. tax authorities rejected proposals to let it exit administration, according to Charles Green, who is leading a group to buy the Scottish soccer club.
HM Revenue & Customs refused to support a proposal by Green’s group to pay creditors 8.5 million pounds ($13.2 million) as part of a Company Voluntary Arrangement that would have seen the club come out of bankruptcy and avoid winding up, Green said in a statement on Rangers’ website.
“I am hugely disappointed by the decision of HMRC not to support the CVA proposal,” Green said. “I do not see what benefit will be gained by this decision.”
Rangers owes the tax authorities more than 93 million pounds in unpaid taxes and two unresolved claims over the use of employee benefit trusts. In total, the 54-time Scottish soccer champion owes creditors more than 134 million pounds, administrators Duff & Phelps said on April 5.
The tax office said winding up Rangers in its current form will allow a new company to start without any burden.
“A liquidation provides the best opportunity to protect taxpayers, by allowing the potential investigation and pursuit of possible claims against those responsible for the company’s financial affairs in recent years,” HMRC said in a statement on its website. “It also means that the new company will be free from claims or litigation in a way which would not be achievable with a CVA. Rangers can make a fresh start.”
Creditors are due to meet on June 14 to vote on the CVA proposals. The amount of money owed to HMRC means they are sure to fail.
Green’s group will now have to form a new company to buy Rangers, and creditors will receive 5.5 million pounds, 3 million pounds less than they would have done under the proposals rejected by HM Revenue and Customs, he said.
“I, along with my investors who believe that Rangers can have a bright future, will fight tooth and nail to ensure the Club recovers from this catastrophic phase in its proud history,” Green said.
Green’s group will look for ways to allow the 26,000 investors in Rangers who will lose their shares as a result of liquidation to buy shares in the new company, he said.
Green will liaise with Scottish football authorities to discuss Rangers’ membership of the Scottish Premier League, he said. The 11 other clubs will have to agree to readmit Rangers as a new company. Otherwise, Rangers will have to apply to be admitted to the Scottish Football League and start afresh in the fourth tier of the country’s soccer league.
Rangers was put into administration on Feb. 14 by previous owner Craig Whyte after HMRC sought to take similar action as a result of income taxes deducted at source from wages wasn’t handed over.
Whyte bought an 85 percent stake in Rangers last year from David Murray for 1 pound, in return for repaying 18 million pounds of loans to Lloyds Banking Group Plc.
The club and Glasgow rival Celtic dominate Scottish soccer, winning every league championship since 1985, when Aberdeen took the title. Rangers came second this year after having 10 points deducted for going into administration.
The two clubs have fan bases that rival some of Europe’s biggest teams. Yet the lack of global interest in the Scottish league means they can’t generate the amount of income reaped by teams playing in England’s Premier League.
The teams, known as the “Old Firm” and traditionally divided between Protestant and Catholic areas of Glasgow, also have been blighted by the sectarian divide among fans. The Scottish government last year introduced legislation to outlaw abuse based on religion.
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