Full Court Verdict (11 Viewers)

sky blue john · Jun 30, 2014

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.

Worth going to court for ?
Worth relegation from the championship ?
Worth 50-70 million of debt ?
Worth playing 35 miles outside Cov ?

Sub · Jun 30, 2014

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.

99. 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. ACL, the Council and SISU agreed to negotiate towards a restructuring; but ACL and the Council were under no legal compulsion to restructure them in any particular way, and SISU had no proper legal expectation that they would be restructured after negotiations in the manner in which they wished.

Sub · Jun 30, 2014

In April 2012, the crisis in ACL was triggered by CCFC/SISU refusing to pay rent which CCFC was legally obliged to pay, in pursuit of the SISU strategy to obtain a return on their investment by buying into ACL cheaply. SISU took that action quite deliberately to distress ACL’s financial position, with a view to driving down the value of ACL and thus the price of a share in it, which they coveted. Indeed, as I have indicated, in these proceedings, the Claimants’ use the argument that ACL’s impending insolvency (which SISU provoked) drove the value of ACL down by up to 30%. Those were commercial decisions that SISU were entitled to take.

Sub · Jun 30, 2014

The documents make clear that, by the relevant time, all of the investment made in the Football Club had been written off by SISU and the investors who invested through them.

Deleted member 5849 · Jun 30, 2014

Sub said:
The documents make clear that, by the relevant time, all of the investment made in the Football Club had been written off by SISU and the investors who invested through them.

That one in itself is interesting. Looks like we're in a new phase for sure, then.

shmmeee · Jun 30, 2014

Deleted member 5849 said:
That one in itself is interesting. Looks like we're in a new phase for sure, then.

So we're saying the actual debt is whatever we've lost since relegation? About £10m by Sisu's figures.

Let's do some maths and see if we can figure out timescales. At £5m/year loss, when does it stop being profitable to be given the Ricoh? £20m total losses? £30m?

Bassman · Jun 30, 2014

Section 78 (ii)

CCFC/SISU had no strategy for maintaining a sustainable football club, except one which involved (i) the purchase, at a knock down price, of at least a 50% share in ACL and thus the Arena, and (ii) the purchase from the Bank, at a knockdown price, of the ACL loan.

Deleted member 5849 · Jun 30, 2014

shmmeee said:
So we're saying the actual debt is whatever we've lost since relegation? About £10m by Sisu's figures.

Let's do some maths and see if we can figure out timescales. At £5m/year loss, when does it stop being profitable to be given the Ricoh? £20m total losses? £30m?

The positive thing too is it'd need less to be an incentive to bog off.

FWIW I have been telling you this all year

shmmeee · Jun 30, 2014

Deleted member 5849 said:
The positive thing too is it'd need less to be an incentive to bog off.

FWIW I have been telling you this all year

No-one likes a smart arse.

fernandopartridge · Jun 30, 2014

sky blue john said:
Worth going to court for ?
Worth relegation from the championship ?
Worth 50-70 million of debt ?
Worth playing 35 miles outside Cov ?

Why are you asking me?

Sub · Jun 30, 2014

147
This too is hopeless. Mr West updated the Labour councillors on 3 December, to the effect that the Bank considered ACL would be able to pay the loan, although ACL did not think that that was the case. ACL rejected the Bank’s restructuring proposal on 6 December, on the basis that it could not safely service the repayments proposed (£1.3m per year). The Claimants do not say how they consider such repayments could reasonably have been made. It is also simply not correct to say that CCFC had agreed a revised rent on 10 December: the parties were still far apart on proposals for on-going rent and rent arrears (see paragraph 73 above). The Hastie Report properly recited that SISU had failed to reach an agreement to pay future rent or arrears (paragraph 3.1.3).

Sub · Jun 30, 2014

148. Mr Goudie submitted, rightly, that this is not a public law ground of challenge: in essence, it is a plea by the Claimants and SISU that the only proper course the Council could have followed would have been to have agreed to the commercial course that SISU were pursuing. For the reasons I have already given, that course was fundamentally flawed; and, in any event, the Council was not bound to pursue the course preferred by SISU – it was entitled to pursue the course it considered was in its own best interests.

Sub · Jun 30, 2014

158. The Council do not accept that its officers acted in a manner "calculated fundamentally to undermine" the SISU negotiations. But, in any event, as I have explained, the SISU plan had terminally stalled by the end of August 2012, because it was impossible for them to agree to purchase the Higgs Charity share in ACL, which was vital to the plan as a whole. This ceased being a material consideration well before January 2013.

Sub · Jun 30, 2014

Conclusion

164. This claim fails in its entirety. Formally, I refuse the application on Grounds 1 and 3, and refuse permission to proceed on Ground 2.

Sub · Jun 30, 2014

well worth the read if you get time

Bassman · Jun 30, 2014

Having quickly read through it, I can't imagine they'll be given the right to appeal.

shmmeee · Jun 30, 2014

He does give them a proper kicking.

@FP: Do you mean the original Ground 3 that Sisu dropped or the revised Ground 3 that the judge said this about?

I can deal with that ground very shortly: it clearly cannot survive my findings in relation to the other grounds, particularly those in respect of State aid.

Sub · Jun 30, 2014

Majik · Jun 30, 2014

Just managed to read through the whole document. SISU take a beating in no uncertain terms, and the judge is blunt in each of the points. I can see SISU being told to pay all costs, and although the document is long, it at least sets some facts straight and brings a bit of common sense to this farce...

Kingokings204 · Jun 30, 2014

This is damning for sisu. It really is. What we knew all along and the judge has confirmed for us.

"The only way sisu could get a return on their investment was but buying the Ricoh cheaply."

And there we have it from the judge himself. Done and dusted.

They have to go now. No positive way or reason to stay. It's over

wes_cov · Jun 30, 2014

Thought for a moment he was saying CCFC were a hopeless football club...... Not that hopelessly loss making is much better...

SISU now seek to show that, in making a £14.4m loan to ACL in which it owned a
half-share, the Council acted in a way which no rational private investor would act.
However, they invested perhaps £50m in the hopelessly loss-making Football Club

Kingokings204 · Jun 30, 2014

" The Football Club had been seriously mismanaged. By April 2012, it was in a truly parlous state. CCFC was balance sheet insolvent, incurring regular substantial annual losses, and a loss of £5m on the annual turnover of £10m. "

From the judge himself

James Smith · Jun 30, 2014

bigfatronssba said:
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.

So what was all that ballcocks about handshakes then?

RPHunt · Jun 30, 2014

There are, for me, a couple of standout points that the judge made:

“CCFC/SISU had no strategy for maintaining a sustainable football club, except one which involved (i) the purchase, at a knock down price, of at least a 50% share in ACL and thus the Arena, and (ii) the purchase from the Bank, at a knockdown price, of the ACL loan. ......
There was no plan B: CCFC/SISU had no alternative strategy for maintaining a sustainable football club at the Arena.”

And

“The Council lacked faith in CCFC/SISU’s ability to run the Football Club sustainably. The Council – and, notably, some particular councillors who made their views clear – did not trust SISU......
The Council’s lack of faith and trust were at least reasonably held. “

So, in the nearest thing we will get to a public enquiry, a judge finds that SISU have no plans or interest in running a successful football club and that SISU cannot be trusted.

olderskyblue · Jun 30, 2014

James Smith said:
So what was all that ballcocks about handshakes then?

Linnell asked fisher 3 times on the radio if he had shook hands on a deal and he dodged the question 3 times.

It was only later that his "we shook hands as we were leaving, not on a deal" excuse came out.

Funny he didn't tell linnell that at the time.

The club seems to be riddled with liars. What did the judge call joy in that old case? Economic with the truth or something?

Houdi · Jun 30, 2014

wes_cov said:
Thought for a moment he was saying CCFC were a hopeless football club...... Not that hopelessly loss making is much better...

Yes loved the Judge's response to SISU's claim that no rational private investor would have acted like CCC would have done in taking out the £14.4m loan, by mentioning that they themselves have invested £50m in a hopelessly loss making football club.

oldskyblue58 · Jun 30, 2014

so a Judge has stated that the draw down of the Escrow and the £10k per match did not constitute payment of rent. Just a couple of questions

1) where does that leave the administrator who netted off these sums against a debt for rent?
2) how does that affect the FL settlement of £590k that Otium owe which is based on a failed CVA calculated by the administrator based on (1) above?

I am sure they will try to appeal this judgement that doesn't mean they can. This must put to rest the notion that "SISU batter people in Court" surely? I am not sure Justice Hickinbottom has left them much room to counter his judgement. He has read all available documentation, put it in to context and impartially given what actually went on.

Deleted member 5849 · Jun 30, 2014

oldskyblue58 said:
This must put to rest the notion that "SISU batter people in Court" surely?

tbf, I think people take a throwaway line a little over-literally.

To keep Messrs Dazzle and duffer happy, I'd suggest they know full well it's always a calculated risk going to court but, well, I suppose it does clarify certain things, doesn't it.

In this case, it clarifies that CCC have followed procedure for the loan to ACL and that's a good thing to know, surely!

stupot07 · Jun 30, 2014

oldskyblue58 said:
so a Judge has stated that the draw down of the Escrow and the £10k per match did not constitute payment of rent. Just a couple of questions

1) where does that leave the administrator who netted off these sums against a debt for rent?
2) how does that affect the FL settlement of £590k that Otium owe which is based on a failed CVA calculated by the administrator based on (1) above?

I am sure they will try to appeal this judgement that doesn't mean they can. This must put to rest the notion that "SISU batter people in Court" surely? I am not sure Justice Hickinbottom has left them much room to counter his judgement. He has read all available documentation, put it in to context and impartially given what actually went on.

I don't get the Escrow ruling, if the only loss of income was the rent, and the escrow was drilled down to cover the non payment of rent, then if sisu paid said rent at a later date, would ACL have to pay the money back into the Escrow?

Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

shmmeee · Jun 30, 2014

stupot07 said:
I don't get the Escrow ruling, if the only loss of income was the rent, and the escrow was drilled down to cover the non payment of rent, then if sisu paid said rent at a later date, would ACL have to pay the money back into the Escrow?

Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

Could be wrong, but I thought I read that the escrow wasn't drawn down for rent, but for compensation of loss of income.

Edit: source: http://www.coventrytelegraph.net/news/coventry-news/former-coventry-city-chairmen-forced-7193749

CET said:
The original agreement saw the pair agree to guarantee a combined £500,000 if the club failed to fulfil its financial obligations to ACL.
However, it is understood lawyers for the pair negotiated a reduced deal and payments of £150,000 each have been made to cover ACL’s ‘‘loss of earnings’’.

stupot07 · Jun 30, 2014

shmmeee said:
Could be wrong, but I thought I read that the escrow wasn't drawn down for rent, but for compensation of loss of income.

That sounds like a cushy number, say the club didn't pay rent for 2 months due to cashflow issues, ACL draw down £200k, then cashflow gets sorted the club pay back the 2 months rent, suddenly ACL have doubled their money. Sounds a bit crazy fish to me.

Edit: just read the quote at the bottom - cover "loss of earnings" well as only the rent hasn't been paid, that is the only "loss of earnings" so it's effectively paid the rent, which then goes back to my question, if the club had paid back the rent, would ACL have to pay back the money into the escrow?

Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

The Gentleman · Jun 30, 2014

fernandopartridge said:
What are you waffling on about? Forget SISU. If ACL goes bust (not saying it will) and defaults on its loan, will the decision to bail them out be the right one?

To be honest mate, I wish we could forget about waffling about ACL. We need to start thinking about CCFC and CCFC only. Sadly though, we have to talk about Sisu/Otium because the buck now rests firmly in their court.

wes_cov · Jun 30, 2014

Think we can safely say the Judge now has a better understanding to this whole farce than many of the fans!

shmmeee · Jun 30, 2014

stupot07 said:
That sounds like a cushy number, say the club didn't pay rent for 2 months due to cashflow issues, ACL draw down £200k, then cashflow gets sorted the club pay back the 2 months rent, suddenly ACL have doubled their money. Sounds a bit crazy fish to me.

Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

I dunno, I go overdrawn with my bank and pay it back and I still have to pay a charge. Could be to cover non-rental costs, but in all likelihood it was drawn up at a time when people assumed the only reason the club would stop paying rent would be severe financial difficulties and ultimately the demise of the club.

Edit: to put the other side across, if the club say stop paying rent for a year and then move out, £500k is scant compensation for the lost income.

James Smith · Jun 30, 2014

stupot07 said:
I don't get the Escrow ruling, if the only loss of income was the rent, and the escrow was drilled down to cover the non payment of rent, then if sisu paid said rent at a later date, would ACL have to pay the money back into the Escrow?

Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

I asked before but I'm not sure if anyone knows: if there had been a mutually agreed ending of the lease by both sides what would have happened to the Escrow?

Full Court Verdict (11 Viewers)

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