Rangers have lodged papers at Edinburgh’s Court of Session stating their intention to enter administration.
The Ibrox club have been awaiting the result of a tribunal with Her Majesty’s Revenue and Customs, relating to employee benefit trust payments to staff and which could cost Rangers up to £49m. It is as yet unknown whether Rangers are aware that case has gone against them, or the club has simply run out of funds to continue trading at their present level.
The papers represent the first step in the formal process of administration. Rangers now have 10 days to formally state that administrators have taken over the running of the business. During that period, the club can speak with creditors in a bid to reach agreement over liabilities.
Rangers can now expect an automatic 10-point penalty from the Scottish Premier League.
Craig Whyte, the club’s owner, mortgaged £24m of future season ticket revenues around the time of his Rangers takeover last May. More recently, Whyte’s running of the club has been subject to intense scrutiny and criticism from previous board members.
The firm prospect of administration, which would bring a 10-point penalty from the Scottish Premier League, will come as no surprise to Rangers fans or the rest of Scottish football.
The Ibrox club are awaiting the verdict of a tax tribunal which could cost club around £49m.
The HMRC case revolves around the use of employee benefits trusts (EBTs) which were in place before Whyte took over from Sir David Murray last May.
The tribunal verdict is imminent but it looks like the Ibrox club have pre-empted any decision.
Whyte, who bought Murray’s shares for £1 and pledged to pay off £18m of debt to Lloyds Banking Group, has seen his short tenure shrouded in controversy.
Last week the former Rangers chairman Alastair Johnston revealed he had asked the Government’s Insolvency Service to clarify “certain financial arrangements” relating to the takeover of the club.
Whyte had earlier admitted securing funds from loan company Ticketus in lieu of future season ticket sales.
Johnston told the BBC “Rangers’ stakeholders are now demanding full transparency. I have had numerous approaches following the recent revelations in the press about the acquisition of Rangers Football Club and the use of future season ticket money.
“I am not in a position to answer all the questions put to me, but I do recognise the issue is causing much concern. I believe this is a prevalent view amongst Rangers’ stakeholders who are now demanding full transparency about the funding of the acquisition of the club, its current financial status, and most importantly, the way forward.”
A Scottish Premier League spokesman said that a 10-point deduction and a transfer Embargo would only be put in place when administration was confirmed.
The spokesman said “At this point in time Rangers are not in administration and we await developments. The instant that they are technically in administration there will be an automatic 10-point deduction and, perhaps of less relevance, an Embargo on player registrations.
“If administration is confirmed, as we have done previously, we would be looking to work with the administrators and would be looking for a very early meeting.”
Rangers announced they had agreed a deal to sign Gabon striker Daniel Cousin just as news emerged from the court.
Rangers finance timeline
1988 David Murray buys a majority shareholding in the club for £6m from Lawrence Marlborough.
2001 The Murray Park training ground is opened at a cost of £14m.
2002 Murray quits as chairman but continues as owner.
2004 Murray returns as chairman after increasing stake in the club. Murray heavily underwrote a £57m share issue after the club’s debts peaked at £72m.
26 August 2009 Murray announces he is to step down as Rangers chairman. Alastair Johnston is named as his successor
24 October The club’s manager Walter Smith claims Lloyds Bank is controlling Rangers’ spending following the appointment of one of its representatives, Donald Muir, to the board
12 November Rangers’ annual report shows debts have risen by £10m to £31m
27 April 2010 Rangers confirm they are under investigation by Her Majesty’s Revenue and Customs over offshore payments to players from 2001. A final tax bill could be as much as £49m.
9 June The London-based property developer Andrew Ellis’ consortium, RFC, announces to the Stock Exchange they are in “advanced negotiations” to buy a controlling interest in Rangers.
15 June Rangers announce Murray International Holdings (MIH) is no longer “actively marketing its controlling stake in the club for sale” after failing to receive a suitable offer.
22 September Rangers announce a reduction in debt from £31m to £27.1m.
18 November Craig Whyte confirms to the Stock Exchange he is considering making an offer and is in talks with MIH regarding a proposed takeover.
3 December Whyte reaches an “agreement in principle” with Murray and meets Johnston for the first time.
28 March 2011 Whyte officially completes his due diligence.
30 March Whyte and Lloyds reach agreement over the debt repayment.
1 April Rangers announce an £11.9m profit for the last six months of 2010 but £2.8m is wiped off for a one-off tax payment over an issue relating to 1999-2003. Johnston admits the other ongoing tax probe could leave Rangers with a bill they cannot afford to pay.
6 May Whyte announces his acquisition of Murray International Holdings’ 85.3% shareholding in Rangers for £1 after the Takeover Panel ratify the deal.
24 May Johnston and Paul Murray are removed from their roles as directors. The chief executive Martin Bain and director Donald McIntyre are suspended.
20 June Bain instructs his lawyers to open legal proceedings against Rangers. Four days later, Bain resigns.
13 September Bain succeeds in having £480,000 of the club’s assets frozen while pursuing a legal case.
10 October McIntyre resigns as finance director but remains as an employee of the club. Just over a week later, he has £300,000 of Rangers’ cash frozen pending a court case.
20 October Whyte instructs his lawyers to begin legal proceedings against the BBC over allegations made against him in a documentary, having previously withdrawn all co-operation with the broadcaster. The BBC says it stands by its investigation.
30 November Rangers’ annual financial figures show net debt has been halved to around £14m. The club also confirm Whyte had previously been disqualified as a company directory for seven years from 2000.
9 December Rangers agree an undisclosed out-of-court settlement with McIntyre.
9 January 2012 Rangers’ shares are suspended from trading on the Plus Stock Exchange for failure to submit audited accounts.
18 January A three-day tax tribunal closes in Edinburgh.
31 January Rangers sell their top goalscorer Nikica Jelavic to Everton but fail to replace him before the transfer window closes. Whyte admits using three years’ worth of future season ticket sales to secure funds but denies using the money to fund his takeover.
13 February Rangers lodge their intention to go into administration at the Court of Session in Edinburgh.