A Place to Stand

  Some years ago Marvel Comics went bankrupt. What had happened is that an American entrepreneur Ronald O. Perelman had borrowed most of the purchase price of the company, and then paid it off by putting it in Marvel's account, in the red & then set out to wring every short term cent he could from the company. As

he was the puppeteer who set into motion the policies that ultimately nearly ended our world. From the beginning, his agenda was purely financial. He saw Marvel as an undervalued asset when he purchased the company for the bargain price of $82.5 million in January of 1989. He reasoned, quite correctly, that if he raised prices and output, that hard-core Marvel fans would devote a larger and larger portion of their disposable income toward buying comics. Once he had enough sales numbers in place to prove this hypothesis, he then took Marvel public, selling 40% of its stock for vastly more than he paid for the entire company. The flaw in his plan, however, was that he promised investors in Marvel even further brand extensions, and more price increases. That this plan was clearly impossible became evident to most comics retailers early in 1993, as more and more fans simply quit collecting due to the high cost, and amid a widespread perception of declining quality in Marvel comics. ....

Ronald O. Perelman continued trying to build Marvel into a mini entertainment conglomerate. In a flurry of acquisitions during the early 1990's, Marvel purchased Fleer Trading Cards, SkyBox Trading Cards, Panini Stickers, Welsh Magazines, and Malibu Publishing. The total cost of these acquisitions (plus an ill-advised repurchase of half of the stock held by the public) ultimately pushed Marvel's bank debt to over $700 million dollars. That's more than eight times what Perelman paid for the company in 1989! At the same time as Marvel was going deeply into debt internally, Perelman convinced an army of gullible investors to purchase $900 million in zero coupon bonds, with the only collateral backing the bonds being his ownership of 60% of Marvel's stock. Because the paper trails are hard to follow, there is some debate as to how much all this financial magic ultimately netted Perelman, but Raviv speculates that he (through his holding companies) benefited to the tune of somewhere between $200-$400 million dollars.

  Any of this sound familiar. Now I would not wish to suggest that Craig Whyte is another Perelman. He isn't remotely as smart as his history of bankrupt firms, including the one his father left him, from which he has extracted assets before the collapse shows.

His first job was with his father's plant hire firm, and in 1990 he set-up his own plant-hire company. The company, Whyte Hire, was not a success and went bankrupt in the early 1990s with debts of around £300,000. Whyte recovered from this loss and branched out into security, manufacturing and property. In 1997, aged 26, he was Scotland's youngest self-made millionaire. After selling off most of his businesses, he moved to Monaco. When he moved back to the UK (to London), he became a venture capitalist...

Whyte had illegally been a de facto director of a company called Re-Tex during a seven-year period when he was banned from doing so – a claim supported by Robert Burns, the Head of Investigations at the Insolvency Service. Prior to Re-Tex being wound up in 2003, the company made an offer to sell shares to potential shareholders at a price based on company statements the BBC alleges contained "false and misleading" information, formed from accounts signed off by fake auditors appointed by Whyte. The auditors were allegedly run by a convicted fraudster – and former associate of Whyte's – Kevin Sykes. Whyte's ban from being a director followed the failure of one of his companies – Vital Holdings Ltd – to produce satisfactory accounts. The investigation also alleged participation in an array of other criminal acts, including taking £100,000 from the Re-Tex account, ostensibly to pay a tax bill

    Whyte has repeatedly claimed that he personally guaranteed the Ticketus deal whereby they gave him, or his agents, but not Rangers, £25 million against future Rangers seat earnings. Though he has undeniably lied repeatedly I tend to believe this since Ticketus would have to be incredibly stupid not to to have required such a guarantee. So if Rangers is declared actually bankrupt they will pursue him. Oh dear, to bad, what a shame, never mind. However if a deal short of bankruptcy is done Whyte is likely to emerge not only safe from that but as a creditor, having written various contractual obligations to himself.

     But looking at what happened to Marvel is instructive. Marvel's assets largely consist of their characters and the fans loyalty to them, as Ranger's main asset is its brand name and the fan's loyalty to it.

     Marvel never missed a single comic publication date. A new company was created  whose shareholders were given shares in proportion to what they were owed (including Perelman). Since then the company has recovered, is still easily the largest comic publisher and owns what is soon to be the $ billion raking in Avengers film.

     If this, known as a debt for equity swap, was done the Inland revenue would undoubtedly end up owning the majority share. However they are not in the business of running football clubs and would quickly sell the shares for whatever the market price was. Rangers would be a debt free company, admittedly penalised in points, but able to get on with its real job of playing football. It would probably have a few lean years but that would be it.

   And then the Inland Revenue, having lost a lot of money, might wish to talk to Whyte about his apparently criminal retention of millions of pounds of tax and PAYE. Not for the first time.