As you may have learned recently in the media, the former Chief Executive of Rangers FC, Martin Bain, is claiming at least £960,000 damages from Rangers FC in connection with the termination of his employment.  Following a recent Court Hearing, Mr. Bain was granted Warrant by the Court to arrest £480,000 of funds  due to Rangers “on the dependence of his claim”.

1.    What is a Warrant to arrest and/or inhibit on the dependence of a Court action?

Warrant to arrest and warrant to inhibit are interim protective remedies which can be obtained by a person claiming payment of money from an alleged debtor. If the application is granted by the Court, a Warrant to arrest on the dependence authorises the claimant to arrest (freeze) funds of the debtor in the hands of third parties, including the debtor’s bankers.  The claimant then proceeds to try and succeed with his claim in Court.

Warrant to inhibit on the dependence is similar, but allows instead the freezing of heritable property assets of the debtor rather than money due to the debtor.

2.    When is Warrant granted by the Court?

If a Court action is raised and warrant to arrest/inhibit on the dependence sought at the outset of the case, the Court can grant the application if (1) the claimant has a good stateable case, (2)  if the debtor is either (a) absolutely insolvent (assets less than liabilities) or practically insolvent (unable to pay his debts as they fall due) or (b) if there is sufficient risk of the debtor being insolvent before the claim is concluded, and (3) if it is reasonable overall for the Court to grant the application.

3.    How did Martin Bain succeed  in his application against a huge institution like Rangers FC?

Attached is a copy of the full decision of the Court.  Mr. Bain satisfied tests (1), (2b) and (3) above.  He showed a good stateable claim for damages against Rangers.  He showed that while Rangers were solvent at the time, if they lost the ongoing £49m HMRC tax case, they would be very likely to be insolvent and unable to meet Mr. Bain’s claim if he won it.   Mr. Bain also showed it was reasonable to be grant warrant and arrest funds due to Rangers by third parties (although the Warrant was reduced by 50% to £480,000 of funds because Mr. Bain was directly involved in setting up the offshore player payment schemes leading to the HMRC tax dispute).

4.    How might all of this help my business?

We can aggressively pursue recovery of sums due to you by your debtors in the Sheriff Courts and in the Court of Session in Edinburgh.  As part of the claim, we can seek warrant to arrest/inhibit on the dependence of these Court actions, the application seeking to satisfy the same tests as in Mr. Bain’s case against Rangers. From experience, Courts are often willing to grant these warrants as long as they can see that the claim appears reasonably strong on paper and debtor’s finances weak.  Evidence of bad faith on the part of the debtor greatly assists, such as broken promises to pay.

If we obtain warrant, we can then freeze funds due to your debtor but in the hands of third parties, and (with warrant to inhibit) freeze property assets of the debtors.  This will then allow us to press on with the Court action in the knowledge that there should be sufficient funds available on conclusion of the case to recover your claim as and when it is ultimately successful.

Obtaining warrant to arrest/inhibit on the dependence can often be crucial to success in recovering debts where the debtor is in financial trouble. We recently secured over £150,000 for a client in this way. There are however additional and alternative approaches which can be adopted by us to recover your commercial debts. For example, we can serve a demand letter for payment on the debtor requiring payment within 48 hours under threat of liquidation.  We can thereafter Petition for the appointment of a Provisional Liquidator with a view to having a nominated accountant attend the debtor’s premises.  If full payment is not forthcoming quickly the debtor is then placed by us into full liquidation.  Demand letters (and petitioning for liquidation) are often successful if the debtor in question is fully able to pay but simply decides not to. 

My fellow Litigation Partner, David McElroy and myself will be delighted to help you with recovery of your commercial debts.  Please contact us to discuss how we can best assist you.

Gordon Bell
Partner
Dallas McMillan Solicitors
Tel 0141 333 6750