Both teams lined up in black, and Mr Justice Arnold blew the whistle to start play. The first leg finished even, with the second leg now scheduled for October.
Duff and Phelps, Rangers’ administrators, have raised court proceedings against Collyer Bristow, the firm of solicitors which acted for Craig Whyte and his company in the takeover, as well as against Rangers FC Group Ltd, Mr Whyte’s vehicle for the purchase.
Collyer Bristow is a major London law firm which has found itself in the focus of far more negative publicity than it could ever have imagined when this high-profile job appeared on the horizon. Their former partner, Gary Withey, had an integral role in the purchase by Whyte, even to the extent of being appointed Company Secretary of Rangers Football Club PLC.
Collyer Bristow must now regret ever hearing Mr Whyte’s name, as they are on the sharp end of a £25 million claim.
What reasons are there for the administrators to pursue the claim? One might say glibly that there are 25 million reasons! However, the money at stake will, if the case succeeds, make a huge difference, either to the ongoing Rangers (In Administration) or to the creditors of Rangers (In Liquidation). If Rangers are still in existence, in administration, any recovery in the court process will be of huge importance in keeping the team going. The administrators wanted the case to be fast tracked to a hearing in July. The court did not agree, and the hearing was put on the books for October. This was despite the argument for the administrators that an early hearing was essential as “Money is tight, time is short”.
In any event, a substantial recovery will be of benefit to the creditors, either to the generality of them, or to the secured creditor (Mr Whyte’s company).
Tuesday saw the parties outline their claims before Mr Justice Arnold. Mark Phillips QC, acting for Duff & Phelps, accused the firm of conspiracy, breach of undertaking, negligence and breach of trust.
Interestingly counsel for Duff & Phelps took a different stance in London from that which the administrators were taking in Glasgow in disputing the SFA charges against the club. Phillips told the court that there was no evidence anyone else at Collyer Bristow was involved, but that as Withey had authority to act for the firm, it was liable for the losses flowing from his “conspiracy”.
In the SFA disciplinary proceedings, it was Rangers’ defence that the club ought not to be held responsible for the actions of one rogue individual, namely Mr Whyte. However, as serious money is at stake, the opposite argument is deployed in the Collyer Bristow case.
Duff & Phelps’ QC told the court that Mr Whyte’s offer to buy the club persuaded the board, including Paul Murray, leader now of the Blue Knights consortium, not to launch an alternative £25m share issue to generate the money needed to stabilise Rangers. Mr Phillips told the judge that, instead of proceeding with the share issue plan, the directors agreed to the takeover.
We will need to see the full details of this argument as the case proceeds. It does not appear to accord with what has been made known publicly about the takeover. One recalls Alastair Johnston’s appearance on the BBC Inside Story programme where he stated that the Lloyds Banking Group insisted on the deal going through, refusing to allow Murray International Holdings, the sellers, to consider the alternative plans.
Once the administrators were appointed on 14th February this year their investigations into money held by Collyer Bristow proceeded, and caused them concerns,
Documents provided to the court are reported as saying: “Initially Mr Withey responded by stating that Collyer Bristow did not hold any money for the club. Then he changed his story and said that Collyer Bristow was holding only £260,544.14 for the club. On 22 February 2012, however, Biggart Bailie [representing the administrators in Scotland]received an email from Jeff Roberts of Collyer Bristow to inform them that Collyer Bristow was in fact holding £3.918,106.54. The situation then became even more peculiar. To use a colloquial expression, Mr Withey ‘did a runner’. From 24 February, he was absent from Collyer Bristow’s offices and on 2 March 2012 he resigned as a member of the firm. It was clear that something was seriously wrong.”
The court papers are stated to go on to allege: “… the joint administrators’ … initial understanding of the position had been based on a deliberate deception by [the Rangers FC]Group and Collyer Bristow.
“Most importantly, although group and Collyer Bristow has led the vendor and the board to believe that group had paid a sum in excess of £9.5m to Collyer Bristow, and that Collyer Bristow had been holding this sum in its client account for the club at the time of the takeover, it is now clear that this story was untrue”.
Mr Phillips, for the administrators, told the court that Mr Whyte used the club’s own potential income from future season ticket sales to show that he had the money
That seems strange. The Ticketus money was apparently not paid over until after the takeover.
Therefore, Mr Whyte could not have used that money to prove he had the money! Alternatively, if the Ticketus money was paid to Collyer Bristow in advance of the sale, to be held to Ticketus’ order until the sale concluded, then Collyer Bristow did have the money!
According to Mr Phillips, the case against Mr Withey is that he wrote letters to other firms confirming that Collyer Bristow had received the takeover money and was holding it in its private client account, when in fact the group “never paid these sums to Collyer Bristow” and the firm “was not, and never had been, holding them”.
From what is publicly available, it may well be true that Group paid nothing to Collyer Bristow.
However, take a house mortgage as an example. In the long ago days of 110% mortgages, a buyer might not pay a penny to their solicitor for the purchase, because all the money, for the purchase and legal costs, was coming from the lender.
It is alleged that Mr Withey forged Whyte’s signature on a letters claiming to have the funds available. Mr Phillips told the court:
“Mr Whyte and Mr Withey conspired together with intent to injure the club by unlawful means. The principal purpose or objective of the conspiracy was the acquisition by group of the majority stake.
“Mr Whyte and Mr Withey knew that the share issue and the takeover were mutually exclusive alternatives … The success of the conspiracy would therefore cause financial detriment to the club in the sum of £25m. The club will therefore incite the court to conclude that they intended to cause loss to the club or were recklessly indifferent.”
Conspiracy and forgery are very serious matters in any circumstances, but especially for a solicitor.
Have Duff & Phelps notified the police? It also seems odd to allege that Mr Withey forged Mr Whyte’s signature on a letter stating funds were available. The case seems to be that Rangers relied upon Collyer Bristow’s undertakings, not those of Mr Whyte.
Mr Philips added: “It is extremely difficult to see what case Collyer Bristow can mount that the repeated statements of Gary Withey were anything but false. It is incontrovertible that these statements are untrue. I find it fanciful that it needs a great deal of investigation.”
Collyer Bristow have responded, saying: “The details disclosed in court today were contained in the original particulars of the claim forms previously filed and we will be defending them vigorously.”
Even if the facts as alleged by Mr Phillips are true (which is disputed) he will still have to prove that such activity caused losses to Rangers. Bearing in mind the failure of the last Rangers share issue, it will require a lot more than the assertion that a new one would have raised £25 million to establish that as a fact!
This case will have many more twists and turns. Whether the outcome finally benefits Rangers, or its creditors, remains to be seen. Visit site to know more.
Written by Paul McConville