Legality (3 Viewers)

dongonzalos · Mar 27, 2014

Is this correct, did it happen in this order?

SISU look to buy Higgs' share of ACL.
SISU see ACL's books.
SISU stop paying rent to ACL
ACL become distressed and YB may call in the loan (14 million)
SISU look to buy the loan for less value than it is worth as it was about to be called in?
The Council pay YB the correct value of the loan.
ACL now pay the council back plus interest. So the council will make money on its investment.
SISU want a JR because the council paid the correct value for the loan and they should not have used Government money in this manner.

If the above is correct is it legal that a company can not honour it's legally obligated contract. It can then attempt to gain a financial advantage from a third party company who are financially impacted as a knock affect by the first company not paying their bills to the middle company.

I am sure if the above is what has happened SISU must know they are legally on sound footing. However it really does not seem right.

fernandopartridge · Mar 27, 2014

dongonzalos said:
Is this correct, did it happen in this order?

SISU look to buy Higgs' share of ACL.
SISU see ACL's books.
SISU stop paying rent to ACL
ACL become distressed and YB may call in the loan (14 million)
SISU look to buy the loan for less value than it is worth as it was about to be called in?
The Council pay YB the correct value of the loan.
ACL now pay the council back plus interest. So the council will make money on its investment.
SISU want a JR because the council paid the correct value for the loan and they should not have used Government money in this manner.

If the above is correct is it legal that a company can not honour it's legally obligated contract. It can then attempt to gain a financial advantage from a third party company who are financially impacted as a knock affect by the first company not paying their bills to the middle company.

I am sure if the above is what has happened SISU must know they are legally on sound footing. However it really does not seem right.

It is legal - it's basically a hedge fund's bread and butter - not saying it's right.

stupot07 · Mar 27, 2014

I'm not sure that is all correct, for a start I'm pretty sure the council bought the loan back for £1m less than was owed (£14m instead of £15m). Pretty sure I read that on hear or on the CT

Some of your earlier points are conjecture......

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

chiefdave · Mar 27, 2014

dongonzalos said:
If the above is correct is it legal that a company can not honour it's legally obligated contract. It can then attempt to gain a financial advantage from a third party company who are financially impacted as a knock affect by the first company not paying their bills to the middle company.

Worth noting that Labovich has more than once stated it is illegal for two companies to work together to disadvantage a third. In his arguement it's ACL, the council and Higgs but surely the same must then apply to others?

shmmeee · Mar 27, 2014

stupot07 said:
I'm not sure that is all correct, for a start I'm pretty sure the council bought the loan back for £1m less than was owed (£14m instead of £15m). Pretty sure I read that on hear or on the CT

Some of your earlier points are conjecture......

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

This post is literally the first time I've heard that £15m figure. You sure that's right?

dongonzalos · Mar 27, 2014

fernandopartridge said:
It is legal - it's basically a hedge fund's bread and butter - not saying it's right.

It really is scary that this can be right

wingy · Mar 27, 2014

Don't know the Cronology anymore as It's done to death but IIRC the rent strike started Prior to or around the agreement re HOT so conversations must have been had while the strike was ongoing ,so point 3 should be point one.

dongonzalos · Mar 27, 2014

stupot07 said:
I'm not sure that is all correct, for a start I'm pretty sure the council bought the loan back for £1m less than was owed (£14m instead of £15m). Pretty sure I read that on hear or on the CT

Some of your earlier points are conjecture......

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

14 million instead of 15 million I never realised that.

Which other bits are not correct and why?

dongonzalos · Mar 27, 2014

wingy said:
Don't know the Cronology anymore as It's done to death but IIRC the rent strike started Prior to or around the agreement re HOT so conversations must have been had while the strike was ongoing ,so point 3 should be point one.

That one I was not sure about.

So the rent strike was prior to buying the shares.

wingy · Mar 27, 2014

Remember Deluded did that big Article In the Mail Oct/Nov 2011 after being under huge pressure,Detailing that he would have good news by Christmas on the Higgs/RICOH position.

Rent strike commenced March 2012 ,Talks with Higgs officially acknowledged around May/June 2012 ,Of course Its possible they held talks that lead to the Talks .

Maybe the Talks were a stalking horse to attain the Inside position of ACL.

Roger Mellie · Mar 27, 2014

Wasn't it reported at the time that SISU had agreed a figure closer to £7m with Yorkshire Bank to buy out the debt, and in effect ACL with it? As the debt was considered 'doubtful' by YB effectively it's open market value became that £7m figure. No doubt SISUs argument is that the council paid way over market value to bale out a company whose trading position was considered in doubt by its bankers who were prepared to accept 50% of its liability to them, therefore misappropriating public funds. Cov CC will argue they were protecting a community asset. Certainly an interesting one for the judge....

dongonzalos · Mar 27, 2014

Roger Mellie said:
Wasn't it reported at the time that SISU had agreed a figure closer to £7m with Yorkshire Bank to buy out the debt, and in effect ACL with it? As the debt was considered 'doubtful' by YB effectively it's open market value became that £7m figure. No doubt SISUs argument is that the council paid way over market value to bale out a company whose trading position was considered in doubt by its bankers who were prepared to accept 50% of its liability to them, therefore misappropriating public funds. Cov CC will argue they were protecting a community asset. Certainly an interesting one for the judge....

That's the point by not paying the rent you distress the middle company. That means they struggle to pay their money to the third company.
You then offer less than the value of the loan to the third company.
Hence the third company are out if pocket due to your actions in the first place. You then take advantage of this.

Grendel · Mar 27, 2014

dongonzalos said:
That's the point by not paying the rent you distress the middle company. That means they struggle to pay their money to the third company.
You then offer less than the value of the loan to the third company.
Hence the third company are out if pocket due to your actions in the first place. You then take advantage of this.

So ACL were financially unviable without the club paying the mortgage?

Rusty Trombone · Mar 27, 2014

Grendel said:
So ACL were financially unviable without the club paying the mortgage?

unviable
ʌnˈvʌɪəb(ə)l/
adjective
adjective: unviable

1.
not capable of working successfully; not feasible.

In the short term I would imagine it would cause concern, but companies need to adapt, and they seem to have done that.

chiefdave · Mar 27, 2014

Roger Mellie said:
Wasn't it reported at the time that SISU had agreed a figure closer to £7m with Yorkshire Bank to buy out the debt, and in effect ACL with it? As the debt was considered 'doubtful' by YB effectively it's open market value became that £7m figure. No doubt SISUs argument is that the council paid way over market value to bale out a company whose trading position was considered in doubt by its bankers who were prepared to accept 50% of its liability to them, therefore misappropriating public funds. Cov CC will argue they were protecting a community asset. Certainly an interesting one for the judge....

Wasn't the £7m the amount thought they could get back if ACL went bust and couldn't meet their payments? Not sure you could use that as a market figure but of course if SISU can produce evidence they had agreed a deal with YB at that price then it gives some weight to the argument that the council have overpaid. Of course the counter argument is that YB got twitchy as Fisher was in the papers regularly stating ACL would be going bust any day whilst withholding legally owed rent payments. I suspect the legality of all that will need to be worked through at some point in the JR.

What exactly are SISU basing their case around? Is it that CCC shouldn't have helped at all as they should not be getting involved in private business or is it that CCC have entered into an agreement that exposes them to risk?

Moff · Mar 27, 2014

Does all the finer details of the legality matter. We are still owned by a hardballed, sue everything, shit of an owner and we still dont play in Coventry.

I would rather we find a solution to these two issues first.

wingy · Mar 27, 2014

Grendel said:
So ACL were financially unviable without the club paying the mortgage?

Was ACL any less Viable owing £14M. to YB than at Inception,When It owed £21M. ??

Exposure to the reliance on the Club rent would have been 50 +% at the Get go ,around 15% at the finish??

Who was the guy who Jumped ship from ACL to YB ,his opinion would be useful /Interesting.

dongonzalos · Mar 27, 2014

Grendel said:
So ACL were financially unviable without the club paying the mortgage?

It's seems if one minute you are receiving 1.2 million from your anchor tenant. (That is legally owed)
The next you are not then you have to restructure your business to deal with that surely?

However that is not the point I am asking

A does an action ( breaking a contract) to financially adversely affect B.
This has a knock in which impacts B's ability to pay C.
A then says to C I will buy the debt off you at cut price.
The actions of A not fulfilling a contract. Would be mean C gets ripped off.

Is that allowed?

dongonzalos · Mar 27, 2014

Moff said:
Does all the finer details of the legality matter. We are still owned by a hardballed, sue everything, shit of an owner and we still dont play in Coventry.

I would rather we find a solution to these two issues first.

You may find the solution to those issues in questions such as this

Moff · Mar 27, 2014

dongonzalos said:
You may find the solution to those issues in questions such as this

Im not so sure. Sueing people is just part of their everyday world. They seem to win more than lose as they can keep funding those top lawyers to screw everyone over.

A simple question over the Higgs wont, in my humble opinion, cause the first brick to crumble in their empire.

Roger Mellie · Mar 27, 2014

If the assumption is correct that an agreement in principal had been reached by SISU and YB for, say, £7m, then Cov CC readily financed £14m and more or less cleared all of the YB borrowing, then SISU will no doubt base their case on this as an example of how public funds have been misused, as you would assume that if YB were happy to accept a figure from one party, they would also accept it, or maybe a similar but slightly higher offer from another. A bit like selling a house, I guess, but rarely would a rival bidder double your offer that had already been accepted. The market value of commercial debt is a moveable feast as the ability to repay varies from day to day-for example when you lose an anchor tenant who can't easily be replaced, as the currently empty stadium seems to indicate

Roger Mellie · Mar 27, 2014

Sorry Chief Dave I was attempting to offer some thoughts on your last paragraph but can't get the knack of quoting bits of a previous post!

Deleted member 5849 · Mar 27, 2014

Roger Mellie said:
Sorry Chief Dave I was attempting to offer some thoughts on your last paragraph but can't get the knack of quoting bits of a previous post!

Into the Sky Blue Kid corner with you!

wingy · Mar 27, 2014

Roger Mellie said:
If the assumption is correct that an agreement in principal had been reached by SISU and YB for, say, £7m, then Cov CC readily financed £14m and more or less cleared all of the YB borrowing, then SISU will no doubt base their case on this as an example of how public funds have been misused, as you would assume that if YB were happy to accept a figure from one party, they would also accept it, or maybe a similar but slightly higher offer from another. A bit like selling a house, I guess, but rarely would a rival bidder double your offer that had already been accepted. The market value of commercial debt is a moveable feast as the ability to repay varies from day to day-for example when you lose an anchor tenant who can't easily be replaced, as the currently empty stadium seems to indicate

What If In that Argument the Public authority suggested It maintained the level of buyout payment so as not to be open to action through their private Vehicle ACL of Colluding with another In defrauding the bank?

wingy · Mar 27, 2014

Roger Mellie said:
If the assumption is correct that an agreement in principal had been reached by SISU and YB for, say, £7m, then Cov CC readily financed £14m and more or less cleared all of the YB borrowing, then SISU will no doubt base their case on this as an example of how public funds have been misused, as you would assume that if YB were happy to accept a figure from one party, they would also accept it, or maybe a similar but slightly higher offer from another. A bit like selling a house, I guess, but rarely would a rival bidder double your offer that had already been accepted. The market value of commercial debt is a moveable feast as the ability to repay varies from day to day-for example when you lose an anchor tenant who can't easily be replaced, as the currently empty stadium seems to indicate

Also why would YB to settle for £7M if the Club remained In the Stadium afterwards ,why were they dissatisfied with a company who had payed down the loan at double rate ,they could have been exposed for another £3.5M.

Roger Mellie · Mar 27, 2014

Having been in and around banking for most of my working life, sometimes it's preferable to walk away at a 'stop loss' position rather than have to spend disproportionate time monitoring or trying to predict a company's future trading. To a bank that's lending billions, it's a relatively small figure in the context we are talking about here.

wingy · Mar 27, 2014

Roger Mellie said:
Having been in and around banking for most of my working life, sometimes it's preferable to walk away at a 'stop loss' position rather than have to spend disproportionate time monitoring or trying to predict a company's future trading. To a bank that's lending billions, it's a relatively small figure in the context we are talking about here.

Like I said If the Anchor tennent Is still their after the payoff are'nt you doing yourself.

If like the Banking Chrisis It basically fell away due to a switch of confidence ,possibly largely due to commentators ,IIRC and purely from my own perceptions there was not a grand failure of people failing to meet their Mortgage re-payments ,much alike ACL.

Roger Mellie · Mar 27, 2014

What If In that Argument the Public authority suggested It maintained the level of buyout payment so as not to be open to action through their private Vehicle ACL of Colluding with another In defrauding the bank?

I guess one way of looking at this is that the bank are not obliged to accept any offer-they could just let the loan run it's course and deal with the default if or when it happened. At some point it becomes commercially preferable to walk away, but it would be unusual for a bank to claim it was defrauded if they accepted a partial repayment of a debt as full and final settlement on a voluntary basis

fernandopartridge · Mar 27, 2014

Roger Mellie said:
Having been in and around banking for most of my working life, sometimes it's preferable to walk away at a 'stop loss' position rather than have to spend disproportionate time monitoring or trying to predict a company's future trading. To a bank that's lending billions, it's a relatively small figure in the context we are talking about here.

Would the repayment of the distressed debt be immediate or over the remaining term in your experience?

Roger Mellie · Mar 27, 2014

True, Wingy. The decision to accept a partial payoff will be influenced by both the wider market conditions and those of the company in question. The gamble is whether to take £7m today in case you'll only be able to get £3.5m next month, or whether you think the entity can ride the storm and improve it's trading. Football and it's associated businesses are notoriously unstable-most banks tend to avoid it or look for a way out these days.

Roger Mellie · Mar 27, 2014

Fernando-would usually be expected as an immediate lump sum in a case similar to this-may accept a repayment programme if you're dealing with the original company who had folded or dramatically changed their trading profile. A bit like if you defaulted on your mortgage and were forced to sell quickly and cheaply I guess. If you opted to try and stay in your house, your lender may extend your term or accept lower payments for a while.

I really must learn to be able to quote other posters properly too!!

skybluetony176 · Mar 27, 2014

i thought the £7M figure thats been quoted was the YB valuation of ACL? Surely the YB would have had to call the debt in (effectively putting ACL in administration) before the administrator working on behalf of the YB could even start talking to a 3rd party/parties (including SISU) about what they would buy the debt for and therefore buy ACL to, much the same as happened with CCFC Ltd?

Going back one step further, wouldn't ACL have to be missing mortgage payments too for this process to begin? i can't recall hearing that ACL missed payments, thats not to say it didn't happen.

duffer · Mar 27, 2014

Fwiw, I think a big part of this case comes down to the valuation of ACL, and hence the loan, at the point when SISU had stopped paying the rent.

As I understand it SISU claim that at this point that ACL was valued at less than £7m, and hence suggest the loan from YB could have been bought at around this amount. You have to watch the linkage here, because one thing doesn't necessarily lead to another - SISU will have to have evidence that the bank would have agreed to that figure, otherwise the case falls down anyway (imho).

The problem is, of course, that it was SISU's actions that caused this low valuation. This is why I think the case got bounced out the first time. Effectively you have SISU distressing ACL by not paying a legal debt, in order to either break it or pick it up cheaply. The council, as an investor in ACL decided that it didn't want that to happen, and stepped in to take over the loan to protect it's investment (at commercial terms).

SISU need to prove that the council acted improperly in doing that. Personally, I think that's quite hard to do, but we'll see.

The second strand, is that SISU suggest that there was a secret agreement between the Council and ACL to force them out of the club via administration. I can't see any way that that can stand up. If SISU pay the rent, there is no mechanism for any third party to take over the club via administration. In fact, although ACL initiated the Admin proceedings, it was the owners of CCFC Ltd who in legal terms took themselves into administration. I can't see how any court could support SISU in this claim, although again we'll know more in July.

I've got most of this from here, btw. First hand comments on the case via the CET.

http://www.coventrytelegraph.net/news/coventry-news/judge-throws-out-sky-blues-5667471

http://www.coventrytelegraph.net/sp...ws/sisu-wins-judicial-review-decision-6354042

Roger Mellie · Mar 27, 2014

My recollection of it was that a number of parties were involved in the discussion-the Higgs Trust being one? Could be wrong but as you say some involvement from ACL and it's shareholders would have been required. I thought this was the case at the time as it proved to be the catalyst to the council's decision to 'trump' the offer and refinance the debt itself. I imagine the discussion may have been instigated by YB as it became increasingly worried about the prospect of full repayment? Only an educated (or ill educated) guess mind!!

wingy · Mar 27, 2014

As I Recall, Paraphrased from a sequence of Shane O'connor Interviews DEc/Jan time .

He went from, "deary deary me ACL are In such a lot of trouble ".

To " We're worried for ACL,the naughty nasty Bank are being mean with them".

To "It's very odd Very Strange " obviously bemused that CCC could bailout ACL.

All this over a sequence of 3-4 critical weeks.

Legality (3 Viewers)

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