Opinon of a corporate lawyer on Otium (1 Viewer)

ericagradus · Nov 11, 2011

Although I am a commercial property lawyer, I have been talking to my colleagues about the set up of Otium.

The fact that the secretary is a insolvency practitioner leads to two possiblilities:

1. That a s.110 restructure is being proposed. This is done to take assets out of the trading company. This is normally done with freehold property. However, I have explained to my colleagues, that there are no property assets. Which leads to point...

2. This company has been set up, for planned administration.

I have bounced this off a few of my colleagues and nothing else stakes up.

So administration it is, but just when?

I would prefer that it was done now, we take the 10 point deduction and we build from there. The club should be able to operate better after admin and we would have more chance of retaining players.

oldskyblue58 · Nov 11, 2011

there are property assets - the training ground and SBSL have a charge over it. Plus the option to purchase the Higgs Charity shares is classed as an asset too.

wrote this the other day

Assume they have sold CCFC H & CCFC to Otium for £1 - I think it has to be seen to be sold. The two companies are worth nothing because of their debts it can be argued. If Otium is a seperate company not owned by SISU funds then they could try argue it is an entirely new venture - except the directors are common to both Otium and SBS&L (but have to be to keep control of it).

They could let CCFC H & CCFC limited go bust and buy back the trademark, name etc out of administration. That would leave all the debts in Optium group with next to no assets. It would also leave the rights to 50% of ACL safe in SBS&L(where it is now) owned by SISU funds, they would probably already have transferred the training ground to SBS&L too so they keep hold of it also (in actual fact thats probably why SBSL have a charge over that asset). That would mean the debt owed to SBS&L by CCFC and CCFC H being written off (its uncollectable really anyway) but the loan from SISU funds to SBS&L still in place. The new CCFC formed and owned by SBS&L would then start next season with no debts - what division and how many points deduction is anyones guess. They would operate from the Ricoh on a smaller budget but with a clean slate, hoping to get success in lower division and some impetus. Might also facilitate a quicker purchase of the RIcoh (the real target) because the whole thing is more viable, and that is where the SISU funds expect to make their return

Does it make any sense to your corporate lawyer colleagues ?

Cheers

ericagradus · Nov 11, 2011

An option to purchase is not a tangible asset. It will mean that the club has a restriction on the property title protecting their interest in a option agreement. The option agreement will also more then likely be unalienable i.e. the benifit cannot be transferred to a different party.

I also didn't mention the training ground, as it is charged. s.110 are for unencumbured property.

You are right about the club value. A notional £1 (for consideration purposes only) would be the likely value if the debts outweigh the assets.

derbyskyblue · Nov 11, 2011

I think higgs and the council would surely see through this anyway and have fook all to do with them.

oldskyblue58 · Nov 11, 2011

The accounts indicate that SBSL owns the option to purchase (I know it is an intangible asset) but as that company only came about when SISU came in then the original option was transferred from CCFC H to SBSL so the benefit appears to be transferrable if necessary. But in the outline I have given they dont need to transfer it, in fact to do so would place the SISU loans at risk

As SBSL owns more than 75% of the subsidiary companies then they can transfer assets around within the group anyway surely? Or am I just thinking of tax law

One thing that concerns me is that the articles of the company are not the standard CA2006 ones they have been amended. Certainly I dont think KD is being entirely accurate when he says Otium is to enable investment in CCFC

skybluejelly · Nov 11, 2011

it seems pretty enevitable administration is going to happen ,so if you were a creditor would you not stop supplying goods or services now or at least get cash up front (maybe they allready are),but admin would not just hinder us there are plenty of firms that will be owed money who might not want to deal with us again if we do the dirty on them.

hotrod · Nov 11, 2011

Would not the FA consider the transfer of the debts to Otium immoral if not illegal.

Paxman II · Nov 11, 2011

I think the powers that be at SISU are simply hedging their bets one way and then another. If you like 'covering all eventualities that may or may not happen down the road' as they keep trying to haul themselves out of the mess.
It's difficult to see how exactly this Optium thing can benefit anyone. If I were an investor I would not want to invest through Optium.
Selling the sum of the parts but not all of the parts will interest investors and protect a slice of cake they can hold onto seems a ridiculous idea. Really not sure what the considered theory behind it was...looks more like jockeying position but still finding yourself at the back!

The Reverend Skyblue · Nov 11, 2011

I don't know which thread to put this question as there is so many, so i closed my eyes and stabbed a compass into my laptops screen and it stabbed on this one.
Here goes, don't get too excited,- when we go into Admin and a new investors take us on ,do the pathetic long term contracts we unbelievably gave to Bell Baker and McSheffrey become null and void.
If so , do the new company completely offer new deals to the entire playing staff, which could mean if they don't like these players we could get rid of them as well.
I'm off to repair my screen.

The rev

skyblue_mortimer · Nov 11, 2011

Hi Rev,

All the employee's contracts will be protected under TUPE law, so they will stay

oldskyblue58 · Nov 11, 2011

Wouldnt the company go into administration and the administrators seek new owners. During the period of administration the administrators are empowered to run the business instead of the directors to keep the businees going so it can be sold as a going concern. Part of the business of a football club is the buying and selling of players. Given that Administrators can be held personally liable for actions/debts whilst in office (plus the hefty fees they charge) you can bet on at least some of the players being sold for the best offers available to meet the costs. That doesnt necessarily mean getting full market value. Contracts are honoured in that period if not sold.

If the club is then sold as a going concern then the contracts transfer as well to the new owners. But at that stage the new owners could seek to renegotiate with each player, or honour contracts or put the player up for sale

crowsnest · Nov 11, 2011

To keep our place in the league we have to continue all player contracts and pay all outstanding football creditors ( transfers, outstanding wages etc). This allows the club to keep its league license to its position in the league.

The manager and any other staff are not part of this and can be made redundant.

Tupe would only apply to employees not made redudant by the administrator and are kept on by the new owner.

Kiddo · Nov 11, 2011

crowsnest said:
To keep our place in the league we have to continue all player contracts and pay all outstanding football creditors ( transfers, outstanding wages etc). This allows the club to keep its league license to its position in the league.

The manager and any other staff are not part of this and can be made redundant.

Tupe would only apply to employees not made redudant by the administrator and are kept on by the new owner.

Adam Bradley was appointed as company secretary of CCFC, CCFC H and SBS&L almost one year ago! If you read up about him, yes he is a licensed insolvency practioner, but he specialising not in winding up companies but working with the management teams of VC owned companies to help find seed capital investment.

If SISU put us into admin, regardless of which of there companies own us at the time then they stand to lose most if not all of their customers 30 million! Why would they do this? We still have assets to sell and SISU will not leave until they are sold. They will want to recoup as much money back before they say goodbye!

ericagradus · Nov 11, 2011

Interesting news about Adam Bradley.

But in response to why admin, SiSU would lose the investment they have already mood, but there consideration will be more about whether they will lose more if they continue to invest.

Basically - do they cut their losses. Just like with shares, that go down in value and what point do they sell (if any) even if they are losing their initial investment

ICHAN · Nov 11, 2011

Don't know much about the legalities of what they are doing and would never pretend to do so (will leave that upto everyone else on here who does know).
However surely they can not keep going this way making losses continually before calling it a day and finally cut there losses, realising they made a hugh mistake trying to get into the world of football.

Kiddo · Nov 11, 2011

ICHAN said:
Don't know much about the legalities of what they are doing and would never pretend to do so (will leave that upto everyone else on here who does know).
However surely they can not keep going this way making losses continually before calling it a day and finally cut there losses, realising they made a hugh mistake trying to get into the world of football.

I can see them cutting their losses but certainly not until February at the earliest. With assists such as Juke, Bigi, Christie,Thomas, Clingan, Cranie, Wood and even to an extent Murphy, Keogh and Hussey they will surely look to sell as many of these as then can in an attempt to recover say 5 million at least.

oldskyblue58 · Nov 11, 2011

Cant help thinking some of our thinking here is one dimensional. If there is a scheme afoot it wont
a) be simple
b) put at risk the SISU investors
c) put at risk the assets the group do have

They are not going to put the whole group into administration, that would lose the £30m already invested by the SISU funds.

That might not stop them arranging things so that parts of the group go into administration, particularly as largest creditor would be SBSL and I assume they would control the administration. The advantage of letting parts go would be to kill some existing debts and thereby ease significantly the cashflow. Some loans are secured eg those on the season tickets but other creditors wopuld have to whistle for it

s110 doesnt kick in until company is to be wound up ....... following from HMRC website

" A company may enter into a formal scheme to pay its debts under

S425 Companies Act 1985 (CA)
S110 Insolvency Act 1986 (IA) when it is proposed to be, or is being, wound up voluntarily or under S167 to S169 in a compulsory winding up."

that doesnt seem to be the case as it stands today

Any assets that are owned by CCFCHoldings are subject to a first fixed and floating charge held by Sky Blue Sports & Leisure Group. That means anything happens to CCFC H then SBSL claims all assets tangible or otherwise in settlement of amounts due to them.

There is no need to apply to courts etc under the insolvency act in terms of moving assets around however. SBSL owns the group companies 100% it can transfer assets anyway under group company regulations.

Removing other debt would be a great advantage to the owners. They can safe guard their investment to an extent by retaining any and all forms of assets - in particular the option on ACL. The remaining company or group looks far more viable and therefore more attractive to investors

I think there are plenty of twists and turns to come. One thing Otium isnt is a simple way to channel funds into CCFC. One thing that wont happen is the administration of the group. But there are I think other options

ericagradus · Nov 11, 2011

oldskyblue58 said:
Cant help thinking some of our thinking here is one dimensional. If there is a scheme afoot it wont
a) be simple
b) put at risk the SISU investors
c) put at risk that the assets the group do have

They are not going to put the whole group into administration, that would lose the £30m already invested by the SISU funds.

That might not stop them arranging things so that parts of the group go into administration, particularly as largest creditor would be SBSL and I assume they would control the administration. The advantage of letting parts go would be to kill some existing debts and thereby ease significantly the cashflow. Some loans are secured eg those on the season tickets but other creditors wopuld have to whistle for it

s110 doesnt kick in until company is to be wound up ....... following from HMRC website

" A company may enter into a formal scheme to pay its debts under

S425 Companies Act 1985 (CA)

S110 Insolvency Act 1986 (IA) when it is proposed to be, or is being, wound up voluntarily or under S167 to S169 in a compulsory winding up."

that doesnt seem to be the case as it stands today

Any assets that are owned by CCFCHoldings are subject to a first fixed and floating charge held by Sky Blue Sports & Leisure Group. That means anything happens to CCFC H then SBSL claims all assets tangible or otherwise in settlement of amounts due to them.

There is no need to apply to courts etc under the insolvency act in terms of moving assets around however. SBSL owns the group companies 100% it can transfer assets anyway under group company regulations.

Removing other debt would be a great advantage to the owners. They can safe guard their investment to an extent by retaining any and all forms of assets - in particular the option on ACL. The remaining company or group looks far more viable and therefore more attractive to investors

I think there are plenty of twists and turns to come. One thing Otium isnt is a simple way to channel funds into CCFC. One thing that wont happen is the administration of the group. But there are I think other options

As I stated earlier - we are not in a position to benifit from a section 110.

You mention the charge over the club, have you checked the companies house register? Is there a floating debenture?

oldskyblue58 · Nov 11, 2011

Thats why i said it ...... dated march 2011. Plus i have all the recent accounts - but thats my profession

Point is i dont think s110 was ever under consideration nor is administration of the whole group.

PWKH · Nov 11, 2011

I have to say it again, just for the avoidance of doubt, the Option is owned by CCFC. Not CCFC Holdings, not Sky Blue Sport and Leisure or anything else.
If it is shown anywhere as being owned by any other entity that is wrong.

oldskyblue58 · Nov 12, 2011

PWKH said:
I have to say it again, just for the avoidance of doubt, the Option is owned by CCFC. Not CCFC Holdings, not Sky Blue Sport and Leisure or anything else.
If it is shown anywhere as being owned by any other entity that is wrong.

Hear what you say but the audited accounts clearly place it under SBS&L. Also CCFC was and is set up to cover the playing side of the operation, it is unlikely that any option would have been owned by that company (it wasnt the purpose of the company). It would have been owned by CCFC H (is why it was set up - to deal with non football playing matters and keep them seperate) and in all probability Higgs Charity agreed as part of the SISU take over to transfer the right to SBSL - they would have had to otherwise they lost their way out of owning it (which is their objective). Would be very surprised if the auditors had made such a basic mistake by signing off accounts that contained such a key item in the wrong place.

Skybluetracy · Nov 12, 2011

Transparent and above board. So why didnt they yell any of us until we found out?
If it is wha they say then he pepole who should be outraged and probably werent consulted are the investors in their Private Equity Fund. This new company, it seems, has raised a loan to fund CCFC. To pay the wages not invest. If so then the people who have granted the loan will rank ahead of the Private Equity Invetors when money comes in or they sell the club. So their anonymous investors (who probably don't know they are invested in CCFC) are being screwed. Shame on SISU

PWKH · Nov 12, 2011

oldskyblue58 said:
Hear what you say but the audited accounts clearly place it under SBS&L. Also CCFC was and is set up to cover the playing side of the operation, it is unlikely that any option would have been owned by that company (it wasnt the purpose of the company). It would have been owned by CCFC H (is why it was set up - to deal with non football playing matters and keep them seperate) and in all probability Higgs Charity agreed as part of the SISU take over to transfer the right to SBSL - they would have had to otherwise they lost their way out of owning it (which is their objective). Would be very surprised if the auditors had made such a basic mistake by signing off accounts that contained such a key item in the wrong place.

I have a copy of the Option Agreement in front of me. It could have been assigned by CCFC to Holdings or SBS&L with the consent of the Charity. That consent has neither been sought nor given. It thus remains with CCFC (reg no 3056875). I am afraid the auditors are wanting.

ericagradus · Nov 12, 2011

PWKH said:
I have a copy of the Option Agreement in front of me. It could have been assigned by CCFC to Holdings or SBS&L with the consent of the Charity. That consent has neither been sought nor given. It thus remains with CCFC (reg no 3056875). I am afraid the auditors are wanting.

can you send me a copy of the option agreement to look at please?

PWKH · Nov 12, 2011

ericagradus said:
can you send me a copy of the option agreement to look at please?

I am sorry I cannot. The contents are confidential to the parties. The fact of it is common knowledge and I can, when it doesn't compromise confidentiality, clarify or correct. Sometimes I have to sit on my hands as postings or articles in the papers are inaccurate and I can do nothing about it. In this case I can clear up just who the parties to the agreement are.

zuni · Nov 12, 2011

sorry to be thick, what does this all mean in basic terms....

oldskyblue58 · Nov 12, 2011

PWKH said:
I have a copy of the Option Agreement in front of me. It could have been assigned by CCFC to Holdings or SBS&L with the consent of the Charity. That consent has neither been sought nor given. It thus remains with CCFC (reg no 3056875). I am afraid the auditors are wanting.

then I totally accept your comment in that case and thanks for the info My misunderstanding so my apologies

Can't let CCFC go into administration then can they if CCFC have the benefit of the option

This thing has so many twists turns and blind corners it is ridiculous!

rob9872 · Nov 12, 2011

This thread hurts my head. I think I'll just go back to calling Eastwood a lazy fat sod and then wait and see what happens with the club.

oldskyblue58 · Nov 12, 2011

I think Rob you are not the only one whose brain hurts trying to figure this all out. There are a lot of good points raised on this forum, there are also a lot good minds looking at the issues and yet with all the skills we have available we still can't figure out what the hell is going on!

is it because ....

the plan is so devious/obscure we cant see it
the plan is so simple we have overlooked it
there is no detailed plan just a series of stumblings between crises

your guess is as good as mine or anyone elses - however the image of being mushrooms kept in dark and fed on B/S repeatedly comes to mind............ probably the only clear image i have had in respect of SISU and co !!!!

Disorganised1 · Nov 12, 2011

I think you might have hit the nail on the head here

"there is no detailed plan just a series of stumblings between crises"

skyblueinBaku · Nov 12, 2011

I feel sure that there is a plan, but the brainy ones on this forum can't yet see it because there are more things to be put in place by KD and SISU before such plan becomes apparent. It is becoming more and more like a le Carre novel.

Nonleagueherewecome · Nov 12, 2011

skyblueindorset said:
I feel sure that there is a plan, but the brainy ones on this forum can't yet see it because there are more things to be put in place by KD and SISU before such plan becomes apparent. It is becoming more and more like a le Carre novel.

Nowhere near as entertaining, though

coundonskyblue · Nov 12, 2011

oldskyblue58 said:
there is no detailed plan just a series of stumblings between crisesQUOTE]

I think that has been the problem all along. I remember talking to someone at the council when Sisu took over & they said even then that sisu didnt have a plan.

sky blue john · Nov 12, 2011

It wouldn't surprise me if this is all a plan to sell the club but they are trying to sell it but keep hold of the option to the higgs half of the stadium.

hackneyfox · Nov 12, 2011

A few people mentioned money owed on football debts having to be paid.

I thought I saw something last week that mentioned those debts would soon be seen in the same manner as all other debts.
i.e. they get the same 10% as every other debt?
I think they were changing it in the near future.

Is that right, does that add anything to the stew?

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