Paul John Clark and David John Whitehouse, joint administrators of Rangers Football Club Plc  CSOH 55
10 May 2012
This was an application by the joint administrators of Rangers Football Club Plc ("Rangers") in terms of paragraph 63 of Schedule B1 to the Insolvency Act 1986, for directions. The Respondents were two limited liability partnerships registered in England, namely Ticketus LLP and Ticketus 2 LLP (together, "Ticketus"). The administrators sought directions as to whether they can be prevented from terminating contracts which Rangers entered into with Ticketus, in terms of which Rangers sold to Ticketus large numbers of season tickers for seats in Ibrox stadium, for each of the seasons from 2011-2012 to 2014-2015. The sums paid by Ticketus to Rangers in respect of the season tickets exceeded £25,000,000.
The administrators amended their application in order to ask the court, in the alternative, to give a direction as to the legal nature of the rights which the agreements confer on Ticketus in respect of (I) the Ibrox stadium; and (ii) the proceeds of future sales of season tickets for that stadium.
The contractual arrangements between Rangers and Ticketus comprised two agreements, namely a season tickets agreement and an agency agreement, both dated 9 May 2011. The Respondents argued that English law applied to the contract, and that, in English law, the agreements conferred on Ticketus "a bundle of transferable licences to occupy a defined number of seats of different types at specified future matches played at Ibrox stadium". The administrators did not take issue with the analysis of English law, but submitted that that was beside the point, given that the law of Scotland governed the proprietary effect of the contractual arrangements between the parties, in the context of the Administration. Those contractual arrangements did not create any real right in the seats which may in subsequent seasons come to be the subject of season tickets.
The court held that it could not give the original direction sought by the administrators without further information as to the relevant circumstances of the administration and the administrators' proposals, in light of their discussions with interested parties. The administrators were unable to provide that information, given that Ticketus were parties to a consortium which has expressed an interest in the purchase of Rangers.
Lord Hodge went on to provide some guidance as to the circumstances in which an administrator may repudiate a contract, summarising his opinion as follows: "(I) an administrator must perform his functions in the interests of the company's creditors as a whole…; (ii) where the company in administration is insolvent, an administrator may have to decline to perform a contractual obligation of the company in pursuit of the statutory objective or objectives in his proposals, if that is in the interests of the company's creditors as while; (iii) should be do so, the court would not, absent exceptional circumstances, force the company to perform those contractual obligations to the detriment of the creditors as a whole; (iv) the court has power to interfere under paragraph 74 of Schedule B1 if the administrator's decision is conspicuously unfair to a particular contractor or creditor; but (v) treating unsecured creditors in accordance with their legal rights in an insolvency would not of itself involve such unfairness."
Susan Ower of Axiom Advocates acted as junior counsel on behalf of the administrator with Paul O'Brien of Axiom acting as junior counsel on behalf of the respondents. Roddy Dunlop QC was also involved in acting on behalf of Rangers at an earlier stage, resisting a petition by HMRC for the appointment of administrators.
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