It is remarkable to think that it’s over 12 months since the first £10m instalment was paid by the Oystons/Segesta following the judgment handed down by Marcus Smith and that nothing of any significance has been paid since.
Owen Oyston defaulted on subsequent payments and consequently enforcement procedures were triggered against his assets: a total of 24 properties and six companies, including Owen’s shareholdings in Closelink (which owns a share of Whyndyke) and Segesta (which owns Blackpool FC, the stadium, the training ground as well as the Travelodge and Quernmore Hall). However, since the orders for sale of those assets, there has been a noticeable pause in proceedings.
What is going on? Has a deal been done? Why doesn’t Valeri Belokon just get on with it? In recent months we’ve all no doubt had conversations in which one or more of those questions has been posed.
Valeri was good enough to send a message to frustrated fans over Christmas. Understandably that didn’t specifically deal with the cause of the delay; rather it acknowledged the criticism levelled by fans in respect of the lack of progress and confirmed that he shared the same concerns.
As it stands, the balance of the judgment (£22m plus interest) hasn’t been paid and there is no indication that Owen or Segesta readily have the means to do so.
When Oyston visited Latvia in June he seemed to have persuaded Valeri to give him further time to raise the funds and yet it appears whatever promises were made have not been honoured.
Enforcement of the charging orders against various properties was then commenced but even then penal notices had to be sought, presumably because of a perceived lack of co-operation on Owen’s part.
To date no committal application has yet been issued to force compliance with the outstanding penal notices and no auctions have been scheduled.
What progress towards change might we see in 2019? What are Valeri Belokon’s options? There appear to be three in the main, with the third looking increasingly likely.
1. Enforced Auctions:
On the face of it, pressing ahead with the auctions seems the logical choice as it is the continuation of a process started last spring.
However, if Owen’s prevarication and lack of co-operation since the orders for sale were made should continue, it could significantly delay the piecemeal sale of properties and also impact on the Court’s ability to supervise a sale of Oyston’s shares in Closelink and Segesta, steps which were always expected to prove problematic.
It must be borne in mind that the sale of Segesta would involve extensive due diligence before any purchaser could acquire Blackpool FC. This is most probably the main reason for the pause in the enforcement action.
2. Agreed Terms:
There is the possibility of the two parties agreeing a settlement, though the steps Valeri has taken since Owen’s trip to Riga suggest Oyston has failed to honour whatever promises he made at that time.
The most likely route to agreed terms in such circumstances would be for Owen to borrow the money to pay Valeri off. However, this might not be easily achieved. How would such a large loan be serviced from the limited income streams that remain available since the ethical boycott/not-a-penny-more took effect?
The possibility of Valeri taking the football club and the stadium in exchange for what is owed doesn’t currently seem likely.
The Latvian has his own issues with the EFL. His Kyrgyzstan conviction for allegations he refutes (albeit imposed in absentia) means he automatically fails the League’s Owners and Directors Test, though that ban can being appealed.
3. Court Appointed Receiver:
Back in December 2017 Marcus Smith questioned whether it might be appropriate for the Court to appoint a Receiver to supervise the realisation of those assets required to discharge the judgment.
Valeri stated he preferred not to take steps that might unduly impact the football club itself, so at the time that option wasn’t pursued.
However, a year down the line and with other options stalling, the appointment of a Court Receiver could be the most likely route to pursue in view of the sums that need to be realised to discharge a significant judgment debt.
What would the appointment of a Court Receiver mean in practice and how would this impact on Blackpool FC? First, it must be appreciated that there are subtle differences between a Court Receiver and an Administrator.
Administrators have taken charge at many clubs and are generally seen as a favourable alternative to the spectre of liquidation. Their appointment is usually sought by a club’s directors to protect the club from legal action by its creditors, thereby allowing it to continue to operate as a going concern while a buyer is found.
Administrators are licensed insolvency practitioners who, generally speaking, have proven success in saving clubs from liquidation.
A Court Receiver, on the other hand, would generally be sought by a Judgment Creditor to assist with enforcement action – a step which is unprecedented in English football. As such there is little understanding of how such an appointment might work in practice.
The appointment of a Court Receiver usually comes about because more traditional methods of enforcement have proved unsuccessful, particularly where the Judgment Debtor has complex asset-holding structures.
There is no formal requirement that the Court Receiver be a licensed insolvency practitioner. However, because insolvency practitioners have experience in investigating assets and managing distressed clubs, they are often the people a Court will turn to when appointing a Receiver.
A Court Receiver’s powers are governed by the order that appoints him/her. As such there are no rigid rules as to the terms of the receivership and/or the powers available to the individual appointed; rather, the Court can tailor these to the factual background that resulted in the decision to seek the appointment.
It is difficult to predict accurately what would happen if a Court Receiver were appointed in Blackpool’s case, particularly as the primary task would be to realise Owen’s, Karl’s and Segesta’s assets – not necessarily to run the football club, though you’d expect that to be a distinct possibility, given it’s the asset that generates the most revenue.
Assuming a Court Receiver were appointed to take over the running of Blackpool FC, then what we would see would probably mirror what happens in Administration, with all club staff reporting to the Receiver rather than to the club’s directors.
It’s also highly likely that a General Manager with a background in football would be brought in to manage the football side of the business, so as to remove the need for any Oyston involvement in the day-to-day running of the club pending its sale.
Possibly the most significant advantage a Court Receiver would bring is their ability to sell the assets ‘as seen’, without reference to the owner’s inflated view as to their value and without having to provide the usual warranties a seller might be expected to provide to a purchaser.
This could simplify the sale process, albeit at the cost of perhaps deflating the price that might otherwise be achieved.
The greatest concern from a fan’s perspective would be how the EFL might react to the appointment of a Court Receiver, as under their rules, this is deemed ‘an insolvency event’ in the same way Administration is.
As such the appointment could lead to a 12-point deduction being applied. As the league table currently stands, that would see Blackpool drop into the relegation places.
It is thought the threat of such a sanction is the most likely reason this option hasn’t been pursued by Valeri Belokon. It is important to add that because it is the holding company, Segesta and not Blackpool FC itself, that would be subject to the appointment of the Court Receiver, the points deduction isn’t automatically applied by the EFL; rather the sanction is a matter for their discretion.
As there is no precedent for this, BST has written to the EFL in an attempt to seek clarification about the governing body’s stance should the situation arise. It is to be hoped that, knowing the background at Blackpool as they do, the EFL would be sympathetic and exercise their discretion favourably, particularly as the ‘insolvency event’ hasn’t been brought about by reckless spending.
A further point to consider is whether the appointment of a Court Receiver, who was directly managing the football club, would cause boycotting fans to resume attending home matches to demonstrate to prospective owners that Blackpool FC is a viable option. This is something the Trust and its members would need to consider carefully once the specific terms of any receivership were known. No such decision should be taken lightly or prematurely.
We always knew the fight to reclaim our club was never going to be easy.
However, Owen’s apparent determination to hold on at any cost to himself and Blackpool FC is really taking us into unchartered territory, where predicting the outcome becomes increasingly difficult.
At this time of considerable uncertainty, we as Blackpool fans need to brace ourselves for the worst and to focus on the objective – the ultimate removal of the Oyston family from our football club.
It is said long-term gain often requires short-term pain. The risk of a points deduction is likely to be the price we have to pay to secure change. It is vital that as fans we stick together and present a united front, so that come the day the Oystons finally exit Blackpool FC, we are best placed to help any new owner with the reconstruction of our club.