Full Court Verdict (2 Viewers)

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Kingokings204

Well-Known Member
fernandopartridge said:
I'm touched.

The council will only be proved right if ACL go on to be a successful company and repay the loan & interest imo.
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Not really. The result is about today and the future will take care of itself.

Do you support ccfc btw?
 
bigfatronssba

bigfatronssba

Well-Known Member
It does seem to be that had Sisu offered a decent amount to Higgs for their share then this could have all been avoided.

Also its interesting to have it confirmed that the club did agree to a £400k rent (after the loan), only for JS to veto it. This was pretty much the end of negotiations between the two sides.

She must therefore take 100% of the blame for us playing in Northampton.
 
Sub

Sub

Well-Known Member
20. CCFC’s rent strike thus provoked a financial crisis within ACL which, as 2012 progressed, increased in intensity.
 
Sub

Sub

Well-Known Member
The background to the negotiations between (amongst others) SISU, ACL and the Council was that CCFC, which had fallen into a parlous state as a result of mismanagement, had unilaterally refused to pay the contractual rent it was legally obliged to pay to ACL; and SISU had made it clear that no on-going rent or arrears would be paid until a solution satisfactory to SISU had been agreed. SISU increased the pressure on ACL and the Council by making it clear that CCFC moving out of the Arena or even the liquidation of the CCFC (and, with it, the Football Club) were options SISU were willing to pursue. There can be no sensible doubt that cranking up the commercial pressure on ACL was quite deliberate on SISU’s part, and was designed to put SISU into the optimal commercial position to broker a deal most advantageous to them.
 
Sub

Sub

Well-Known Member
That ACL were able to draw – and did draw – upon the escrow account is not to the point: although it assisted ACL’s cash flow for a few months, CCFC was still legally obliged to pay the rent and to make good that draw down (both of which it refused to do); and, in any event, all parties were aware that the escrow account would run out in August 2012, prior to the 2012-13 season (as it did). Nor is it to the point that ACL and CCFC/SISU came to an agreement in August 2012 that CCFC would pay £10,000 per home match to cover ACL’s costs of opening up the ground etc. There may be some dispute as to the level of costs actually incurred; but no one suggests that that sum was significant in terms of paying the Bank loan repayments which were running at over £100,000 per month.

Nor is it to the point that all parties (including both SISU and the Council) used the absence of a rent agreement in discussions with the Bank, with a view to reducing the amount the Bank would accept to purchase the loan debt. As we shall shortly see, the negotiations over future rent had stalled, with the parties far apart; and, without resolution of the Bank loan issue, they were never going to fruit into an agreement. Indeed, as we now know, even when the Bank loan had been repaid, it proved impossible to agree rent going forward.

Throughout, SISU were never in fact going to agree a deal over rent without the other pieces of their jigsaw in place, notably the purchase of the Higgs Charity’s share in ACL which gained them access to the Arena revenues and payment off of the Bank loan. But, by the end of August 2012, there was no real prospect of SISU purchasing the Higgs Charity share in ACL (see paragraphs 37-45 below), and SISU’s aspirations for paying off the Bank loan very cheaply were never realistic (see paragraphs 46 and following below) .
 
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shmmeee

shmmeee

Well-Known Member
Judge Kickinbottom said:
At first blush, the Claimants’ submissions appear inherently unattractive. SISU are a commercial organisation, committed (and entitled) to pursue their own commercial interests.

Until April 2012, ACL had been profitable: its balance sheet showed a profit every year (see paragraph 13 above). On the other hand, the SISU company CCFC had incurred substantial losses – regular losses of £4m-6m per year including, in 2011-12, a £5m loss on a turnover of £10m – and was clearly balance sheet insolvent.

It appears to be common ground that poor management greatly contributed to these commercial problems of CCFC. SISU invested about £40m in CCFC until 2012, and, as I understand it, another approximately £10m from April 2012 until CCFC’s demise.

SISU now seek to blame these financial woes on the rent for the Arena which they had to pay, which, they have been at pains to stress at every opportunity, was considerably higher than CCFC’s competitors in the Championship yet alone League Division One, but that is to look at only one small part of the whole canvas. In this case, (i) CCFC had sold their right to revenues from the Arena, to the Higgs Charity for good consideration; (ii) when SISU bought CCFC, they did so in full knowledge of the absence of any right to Arena revenues and CCFC’s contractual commitments including the commitment to pay rent at £1.3m to ACL; and (iii) the outgoings on rent were only a relatively small percentage – less than 10% – of the Football Club’s expenditure.
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Edit: best typo ever. Leaving it in.
 
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Sub

Sub

Well-Known Member
The rent strike by CCFC (and SISU’s refusal to assist in payment of that rent, or any of it) made ACL (and thus the Council’s share in ACL) weak and commercially vulnerable. There can be no real doubt but that it was SISU’s intention that the non-payment of rent should have that consequence. SISU refused to consider a resolution that did not involve them having an interest in Arena revenues. That interest was to be obtained by SISU owning a share in ACL.

The weaker ACL became, the cheaper a share in it would likely be. Furthermore, SISU were intent on buying the Bank debt, in whole or part. SISU deny that they ever intended to purchase the debt other than as part of an arrangement following the Heads of Terms. However, the Council considered that, if SISU purchased the debt for themselves, that would greatly increase their commercial leverage over ACL, which risked being caught between a creditor which could not be paid without receipt of the Arena rent and with step-in powers in the event of loan default, and a non-paying lessee/licence holder, both owned by SISU. Again, the weaker ACL’s financial position was, the cheaper the price of the Bank debt.

 
Sub

Sub

Well-Known Member
Nothing in the evidence before me causes me to doubt any of the findings of fact made by Leggatt J on the evidence before him. Indeed, the evidence I have seen merely confirms them. Indeed, the evidence I have seen merely confirms them. By the end of August 2012, SISU buying into ACL by purchasing Higgs Charity’s share was simply not an option: SISU were unwilling to pay anywhere near the option price, or anywhere near the price the Trustees would have found acceptable, for the 50% share; nor were they willing to give security for future payments that the Trustees, on advice, would have been willing to accept.

 
tisza

tisza

Well-Known Member
fernandopartridge said:
I'm touched.

The council will only be proved right if ACL go on to be a successful company and repay the loan & interest imo.
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so to date they are right as the payments have been made. We have to wait another 43 years for it to be judged a complete success. I hope we still aren't posting on the council and Sisu in 43 years time!
 
shmmeee

shmmeee

Well-Known Member
fernandopartridge said:
The judge didn't make judgement on ground 3 tbf...
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But he does say quite clearly that ACL was a going concern up until the rent strike. That ACL's reliance on one off events that need to be renewed isn't unusual for an arena, nor a comment on their ability going foward. And that Yorkshire Bank were willing to remortgage the entire amount of the loan, showing that in their commercial opinion ACL were likely to make payment on the full loan.

This argument is fast becoming a god of gaps reasoning.
 
Sub

Sub

Well-Known Member
Although SISU were in discussions with the Bank, and the Council feared that they had made their own offer to purchase the debt and they were effectively in competition, there is little available evidence as to SISU’s negotiations with the Bank. However, what is now clear is that SISU considered that they may have been able to purchase the ACL debt – for which the Bank was exposed to the tune of £19m – for perhaps as low as £2m, but no more than £5m. On the other hand, the Bank were satisfied that ACL could in fact service the entire debt albeit restructured, and were not prepared to accept any figure in that area.

The Bank (which was aware of the relevant valuations) appears to have considered that ACL could service a restructured loan of at least £15m, and that the debt was worth more than £12m. The Bank had not made any provision for any of the debt. In the circumstances, it is inconceivable that the Bank would have accepted an offer to purchase the debt for £5m. In considering the Bank would (or might) accept an offer of £2m-5m for the debt, SISU had entirely unrealistic expectations. They were not prepared to offer more.
69. Thus, this element of SISU’s plan, too, was doomed to fail.
 
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Sub

Sub

Well-Known Member
CCFC was contractually obliged to pay ACL about £1.3m rent for its use of the Arena. However, all parties appreciated that that level of rent was not commercially sustainable, especially with the Football Club’s relegation to Division One, unless SISU continued to subsidise the Club which it was unwilling to do. They also all appreciated that an absence of agreement going forward might assist in reducing the value of ACL and of the Bank debt.
 
Sub

Sub

Well-Known Member
After the Council had purchased the Bank debt, thereby resolving that immediate sticking point, negotiations over rent continued between CCFC and ACL. On 29 January 2013, Heads of Terms were agreed, involving rent at £400,000 from 1 January 2013 with an agreement on arrears taking into account a reduced escrow account sum (which left arrears of about £0.5m to be paid) and an in-principle agreement for CCFC to benefit from match-day food and beverage revenues and ACL paying a larger share of the rates on the Arena. The Directors of CCFC and ACL representatives shook hands on that; but the deal was rejected on 4 February 2013 by Ms Seppala (who, as described by Mr Thompson, "sat at the top of the tree in terms of [SISU] decision making") on the basis that she was not prepared to accept any deal that excluded SISU from holding a stake in ACL.
 
Danceswithhorses

Danceswithhorses

Well-Known Member
Sub said:
After the Council had purchased the Bank debt, thereby resolving that immediate sticking point, negotiations over rent continued between CCFC and ACL. On 29 January 2013, Heads of Terms were agreed, involving rent at £400,000 from 1 January 2013 with an agreement on arrears taking into account a reduced escrow account sum (which left arrears of about £0.5m to be paid) and an in-principle agreement for CCFC to benefit from match-day food and beverage revenues and ACL paying a larger share of the rates on the Arena. The Directors of CCFC and ACL representatives shook hands on that; but the deal was rejected on 4 February 2013 by Ms Seppala (who, as described by Mr Thompson, "sat at the top of the tree in terms of [SISU] decision making") on the basis that she was not prepared to accept any deal that excluded SISU from holding a stake in ACL.
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Ouch...expensive mistake Joy !
 
shmmeee

shmmeee

Well-Known Member
fernandopartridge said:
The judge has ruled not but for me it's aid to a private company. I don't see much difference in the council bailing out ACL and it bailing out CCFC.
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JH said:
I have little doubt that a new investor would not have made a £14.4m loan to ACL on the terms that the Council did; but that is not the question that I have to consider, which is whether a private market economy operator, with a 50% shareholding in ACL, would have effectively restructured its business by making a £14.4m loan to ACL on the terms that the Council made the loan.
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shmmeee

shmmeee

Well-Known Member
Sub said:
Section 78 i a good read !
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Sounds like the bank weren't willing to offer a longer rent reduction either, hence the need to restructure the loan.

Wow, it's almost as if the reasons given at the time were actually valid!

Edit: That's 73. Doh!

Edit 2: 78 is a good read!

Some highlights:

The Football Club had been seriously mismanaged. By April 2012, it was in a
truly parlous state.
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CCFC/SISU had no strategy for maintaining a sustainable football club
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The Football Club had been badly managed. ACL (and, as 50% shareholder in ACL, the Council) was persistently looking for a plan from CCFC under which the Club could sustainably compete, first in the Championship and, following relegation in 2012, in Division One. Such a plan was not forthcoming.
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