A judge made the ruling yesterday after saying Rangers face a “real and substantial risk of insolvency” over the club’s £49 million tax claim case brought by Her Majesty’s Revenue and Customs (HMRC).
Lord Hodge, sitting in the Court of Session in Edinburgh, found in favour of Martin Bain, who had sought to arrest nearly £1m of the £1.3m for which he is suing the club.
Mr Bain raised the claim alleging breach of contract following the takeover at Rangers by venture capitalist Craig Whyte from former owner Sir David Murray.
Lord Hodge said he was not persuaded on the material before him that Rangers were presently insolvent “either practically or absolutely”.
However, the judge agreed to an arrestment order of £480,000, half of the sum sought yesterday, because of the future possibility of insolvency.
Lord Hodge said: “I am satisfied that there is a real and substantial risk of insolvency if the tax case were to be decided against the defenders (Rangers) in favour of the Revenue in the sums being spoken about.
“In reaching this view I emphasise that I am concerned with the degree of possibility and not the actuality or probability of insolvency.”
Nicholas Ellis, QC, for Mr Bain, argued there was a precedent in the case in that HMRC had already had an arrestment order made against Rangers for £2.3m over its tax claims against the club.
He also argued the new owner Mr Whyte had acknowledged a risk of insolvency at the club by including a precautionary clause in his purchase contract that directly referred to the tax position.
Brian Napier, QC, for Rangers, said that move was purely the act of a prudent businessman and the judge commented that the precaution was unsurprising.
Mr Ellis told the court that Rangers’ accounts at the end of June last year showed net assets of £70m -- which included Ibrox stadium -- but the tax bill and further £18m debt the club had before it was taken over put it at risk of “practical” insolvency rather than “absolute” insolvency.
Mr Napier said the motion for an arrestment was opposed and claimed Mr Bain had not shown there was a real and substantial risk of insolvency.
The judge said he was prepared to grant a warrant for arrestment sought by Mr Bain’s lawyers but would restrict it to the sum of £480,000.
The court heard the football club faces two tax claims and the larger could leave it facing a bill of £49m -- £35m in tax plus £14m in interest and penalties.
Lord Hodge said he accepted that proceedings were at an early stage with the tax claim but added: “I am not persuaded that the outcome of the Revenue claim is too remote in time for the court to form a view as to the existence of a risk.”
Rangers are contesting Mr Bain’s legal action and have raised a counter claim against the former chief executive alleging breach of contract and fiduciary duties, which he denies.
Mr Napier argued that Mr Bain had held responsible positions at Rangers over a period when the two major alleged debts relating to tax liabilities were claimed to have been incurred.
Mr Bain’s solicitor, Peter Watson, said last night: “This is a protective measure and is quite normal in a case of this nature.
“It simply ringfences a sum of money until either the case is resolved or a settlement is negotiated.”
A Rangers spokesman said last night: “In a week where the focus should be on football, the conduct of Martin Bain, who always claimed to have the best interests of Rangers Football Club at heart, is truly astonishing and I am sure our supporters would agree.
“The club is disputing any money is due to Mr Bain and we will be vigorously appealing the decision. It should be noted the case taken against Rangers has not yet been proven or even heard yet.
“All that has happened today is that a sum of money has been set aside if the club were to lose the case.”