A FORMER Rangers administrator has denied controversial former owner Craig Whyte had control of the selling of the club after its financial collapse and has defended a failure to seek a break-up sale including Ibrox to bring in more money to pay the thousands owed millions.
Paul Clark, who was one of the joint administrators of Rangers when the club financially imploded denied failure as an "ordinarily competent administrator acting with reasonable skill and care" through not controlling the sale process, not getting a valuation report on the club brand and not securing Mr Whyte's shares.
The allegations are being made by Rangers oldco liquidators BDO which is suing the joint administrators of the club Mr Clark and David Whitehouse of Duff and Phelps for £56.8m saying a flawed cost-cutting strategy meant creditors lost millions from the handling of the club’s financial implosion.
Mr Whitehouse and Clark are defending the action in the Court of Session claiming the liquidators expected a “bonkers” strategy of a ‘fire sale’ of Rangers which would have “effectively shut the club down for good”.
The claim comes nine years after the Craig Whyte-controlled Rangers business fell into administration and then liquidation in 2012 after he was at the helm for just nine months leaving thousands of unsecured creditors out of pocket to the tune of millions, including more than 6000 loyal fans who bought £7.7m worth of debenture seats at Ibrox.
The assets including Ibrox and training ground Murray Park were sold to the Charles Green-fronted Sevco consortium for £5.5m while the oldco was heading into liquidation.
Mr Clark admitted that there had been no action to force the transfer of shares from Craig Whyte before best and final bids were being received at the end of May, 2012.
Kenny McBrearty, QC, for BDO said that at least one potential bidder had been put off by the failure to get Craig Whyte's stake which he bought from Sir David Murray, the former chairman of Rangers, for £1 in 2011.
Mr McBrearty said: "At this stage Craig Whyte had a large degree of control over the sale process."
Mr Clark responded: "I don't agree he had control. He had the ability to slow down or make us take further actions, but I do not accept he had control in any regard."
The QC said there was an urgency to get the shares from Mr Whyte immediately on being appointed as administrators.
"That is for others judge," said Mr Clark.
BDO's QC suggested the administrators could have made a condition of their appointment that Mr Whyte transfer his shares, to ensure that there was no problem in any future sale.
"We didn't discuss that with him and I doubt he would have agreed to that," said Mr Clark.
Mc McBrearty referred to a transcript of a meeting between Mr Whyte, Mr Clark and others within the Duff and Phelps administration team on May 1 where the Rangers chief suggested that Mr Green's consortium might provide the better way forward.
Mr McBrearty also questioned the discussions which included details of bids that were being considered and suggested that Mr Whyte was "calling the shots".
Asked if he thought that Mr Whyte had an interest in Mr Green's bid succeeding, Mr Clark said: "Certainly we were told in no uncertain terms that Craig Whyte was not involved in any which way with the Sevco bid. And that was confirmed by Whyte, Charles Green, Mr Green's solicitors and possibly some other individuals.
"We were into the month of May at this point, we were looking for a solution. If he was able to introduce someone that was able to create a deliverable bid then we were prepared to consider it. However, he was advised it would have to be very quick."
Two days later, American businessman Bill Miller was named by Rangers' administrators as the preferred bidder for the club.
"There was no question of stopping that, waiting for Charles Green," said Mr Clark. "So this notion that because he had a meeting on May 1 and told us of a new party that means he was calling the shots, I would totally refute that. History and events prove that that was not the case."
Mr Clark was asked why the administrators had not actively pursued a sale and leaseback of Ibrox or Murray Park.
He said: "Were this a manufacturing business, it is far easier to see how you can break the business up in that way, if you will, and look at these alternatives.
"If there was someone seriously interested and credible to deliver, then they would have appeared at our door, but I do accept that we didn't actively go out and pursue those individuals."
He said he could not dispute that the administrators did not actively obtain specialist property advice about what options there might have been to secure a sale and leaseback.
While some within Duff and Phelps, the company responsible for guiding the club through its insolvency in 2012 were pushing for a brand valuation, it has previously emerged it was dropped in a matter of days with one manager saying it had been considered “a waste of money”.
The brand, which includes the ability to use the club’s name, trademarks and logos for financial gain, and is used in all its merchandising was effectively sold for nothing. An assessment carried out by an independent finance expert on the day of the Sevco purchase and commissioned by the new owners put the value of the brand alone at £16m.
Mr McBrearty suggested that "an ordinarily competent administrator acting with reasonable care would have obtained a brand valuation report and therefore, you precluded the possibility of including that in negotiation with bidders".
Mr Clark said: "I made my opinion that the brand had no separately identifiable value away from...the football club and that was our decision."
Earlier he explained: "If someone thought that the brand was worth £10m why didnt they come forward and get the whole thing from us and they get all the other assets for free."
BDO's QC suggested that "no ordinarily competent administrator acting with reasonable care would have failed to take legal steps to take control of the shares in the company, either immediately prior to the appointment, or following it".
Mr Clark disagreed and also refuted that it lost control of the bidding process as a result.
"I don't accept we lost control of the bidding process. We were always in control of it," he said.
Mr McBrearty also suggested there was a "failure with the standard to be expected with an ordinarily competent administrator acting with reasonable skill and care" to investigate an alternative strategy in terms of selling property.
Mr Clark said he accepted they did not look at the alternative strategy but added: "Once again to stress that the continuation of the business on a going concern was something that was discussed with the major stakeholders."
Papers in the case reveal that while the Rangers assets were bought by Sevco for £5.5m, an independent fair value assessment to the group on the day of the purchase was put at £27.2m.
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