THE law firm at the heart of Craig Whyte's Rangers takeover could face bankruptcy if a legal ruling forces it to pay out millions of pounds for its involvement in an alleged sham investment scheme.
The revelation comes as Rangers players prepare to learn their fate, with the administrators expected to outline the toll of redundancies on the squad today.
Solicitors Collyer Bristow – the London-based firm Whyte hired to oversee his purchase of Rangers last year – are awaiting a court decision as a joint defendant in the £50 million case, which has been raised at the High Court in London by 500 investors. The claim against the firm concerns a complex investment scheme, known as Innovator One.
However, it has been alleged the initiative – a tax-advantage vehicle which Collyer Bristow is accused of promoting – was a fraudulent scam and certain legal conditions were never fulfilled.
The company is alleged to be liable for any dishonest conduct of the individuals who organised the scheme. It is also accused of acting negligently and breaching both contract and fiduciary duties. A four-month hearing on the case ended last month and a ruling is due later this year.
There are concerns that if the firm loses the case it will have insufficient funds to cover potential losses, amid claims of negligence by its insurance broker, Lockton Companies International.
Collyer Bristow has since launched another legal action against Lockton in a bid to ensure the money will be available if it is forced to pay out.
The solicitors alleged Lockton failed to put adequate insurance cover in place during the period of the Innovator One claims. The law firm claims it could be on the brink of collapse if it does not resolve the shortfall. A full hearing on that issue will be heard in May.
Meanwhile, administrators Duff and Phelps are expected to make an announcement on staffing levels at Rangers today, amid speculation some first-team regulars could be heading for the exit door.
In a statement issued yesterday, they said discussions were "ongoing regarding potential cost-saving measures".
In an interview yesterday, Whyte insisted the cuts were necessary to "make Rangers a stronger business", and re- iterated his belief he had not been responsible for any financial wrong-doing during his tenure.
"Every penny is in the club and every penny is accounted for," he said.
It coincided with a statement from Ticketus – which paid £24m to secure the right to sell the club's future season tickets in a deal which provided cash for Whyte's takeover – calling for a "rapid and successful conclusion" to the administration process.
The company said it was "committed to going to the lengths necessary to ensure the future of the club is preserved and its agreement with Ticketus fulfilled".
In a move that is bound to be seen as a swipe at Rangers, Chief Secretary to the Treasury Danny Alexander will court controversy today by comparing tax dodgers to benefit cheats, and making a specific reference to football clubs.
He will tell the Scottish Liberal Democrat conference in Inverness: "People who dodge taxes are on the same moral plan as benefits cheats. Whether you are a wealthy person or a small business, a football club or a bank, our message is simple – you must pay the tax you owe and we will make sure you do."
