From Cov Mad:
NOTE OF MEETING - SKY BLUE TRUST, SUPPORTERS DIRECT & FOOTBALL LEAGUE - 27 JUNE 2013
Peter Hannon (PH) of The Football League (FL) travelled to Coventry to meet representatives of the Trust and Supporters Direct. He confirmed that the Trust could share with Trust Members (and therefore with the public) the points made in the meeting. However, he also stressed that there would be some issues on which he could not comment at this stage, due to legal constraints.
The FL have yet to take any decisions regarding the outcome of the Administration of CCFC Limited or the location of future home games. What follows is a summary of the process being undertaken and the matters which The League takes into account in all cases of clubs in financial distress.
The FL operates on the principle of a “rescue culture” under which it tries to secure the future of the club as an ongoing member of The Football League, if possible.
The FL has previously issued statements regarding the ownership of the so-called “golden share” to the effect that it is held by CCFC Limited. When that Company was placed into Administration, the FL served a notice of withdrawal of that share and applied a 10 point deduction in line with its regulations. However, as is normal, that notice of withdrawal was suspended to give the Club the opportunity to continuing playing matches in the competition while the Administration process was completed. The FL deal with Clubs in Administration under the terms of its (unpublished) Insolvency Policy. Whilst in Administration a club is under a transfer embargo and can only sign players at the discretion of The Football League – it can sell players, however.
The Administrator is an officer of the Court whose role is to maximise financial return for an insolvent company’s creditors through finding a new purchaser for the company or by liquidating it. It is up to him who he sells the club to and it is for The Football League to then work with the proposed new owner towards satisfying the conditions of the FL’s Insolvency Policy
The League would normally expect there to be a Company Voluntary Arrangement (CVA.) agreed with unsecured creditors. The Administrator can propose a CVA and where he does so he is required to call a meeting of creditors to consider the proposed CVA by giving 14 days notice. If the CVA is then agreed, there is a 28 day “cooling-off” period during which any unsecured creditor can challenge the terms of the CVA. Where no challenge is brought, the CVA binds unsecured creditors. We understand that no notice of such a meeting has yet been given. PH also pointed out that the process could potentially go on for some time whilst the CVA is negotiated – e.g. Portsmouth went on for many months but under FL rules a club cannot start two consecutive seasons in administration.
Where a CVA is not possible but the Administrator does have a buyer for the Club, (for example if a creditor with sufficient voting power opposes the CVA) the FL Board can “make an offer” to the Club as to the terms on which the Club could come out of Administration and hold the FL share. In previous, but not all, cases those offers have involved a further points deduction along with other conditions.
A number of processes have to be completed before the League will approve a transfer of membership to a new entity, thus ending the period of Administration. The first is that the proposed purchasers must meet with the approval of the League, including meeting the requirements of the FL’s “Owners and Directors test.” This is an objective test whereby the intended owners and directors have to sign a disclosure relating to the matters set out in the FL Regulations (which cover, amongst other things, matters such as any unspent convictions, suspensions from other sporting governing bodies and involvement with two or more insolvent football clubs).
In considering the suitability of the proposed owners, the League are interested in any “ultimate beneficial owners” of the Club and anyone with a 10% stake or more will be required to be publicly disclosed. They will consider the information disclosed by the proposed owners and directors and any other relevant information in the FL’s possession. We asked whether they would consider information provided by the Trust and they confirmed that they would take any relevant factual information provided.
We asked whether the FL would take into account the record of the owners of CCFC over the last few years - for example in failing to file their statutory accounts in two successive seasons. PH said they could only take account of the matters set out in the regulations. They would consider any information about the involvement of individuals who may not be formally appointed as Directors but who exercise decision-making authority, which includes any “shadow directors.”
The FL also consider the new owners’ business plan for the Club. Their aim here is to try and ensure that such a plan “stacks-up” so that there is little risk that the Club will soon be back into Administration. This process, is again conducted under the Insolvency Policy. The FL Board will “concentrate on the numbers.”
