Bury MP and fans groups call for inquiry into CVA and football regulation
The Bury North MP, James Frith, has called for an Insolvency Service investigation into the company voluntary arrangement (CVA) organised to cut the debts of struggling Bury football club, who were expelled by the English Football League on Tuesday night.
The Football Supporters’ Association also said that it had asked the insolvency practitioners’ professional body R3, and the Insolvency Practitioners Association, to investigate the conduct of the CVA.
The concerns of both Frith and the FSA centre on a £7m claim admitted into the CVA as a debt owed by Bury to a company, Mederco, owned by Stewart Day, the club’s former owner. In December, shortly before several of his property companies collapsed into administration, Day sold Bury for £1 to Steve Dale, the owner under whose tenure the 134-year-old club has been expelled.
In July Dale, having failed to pay the club’s players for three months when they won promotion and with the club facing a winding up petition from HMRC for £1m unpaid taxes, worked to secure the CVA, which offered creditors 25p for every pound owed.
At a rescheduled creditors’ meeting on 18 June, the insolvency practitioner supervising the CVA, Steven Wiseglass, included a £7.1m debt owed to Mederco, which is in administration. Creditors were told that the debt had been bought by RCR Holdings Ltd, a company formed only two days before the meeting. The weight of the £7.1m debt was crucial to the CVA being passed, as HMRC and several other creditors voted against it. Last week the sole owner and director of RCR Holdings, Kris Richards, 41, confirmed to BBC Radio Manchester that he is the partner of Dale’s daughter.
The Mederco administrator, Leonard Curtis, told its creditors last week that they could not establish how much
money, if any, was owed by Bury, and in an official progress report, did not state a figure of £7.1m. They said that there was a “lack of evidence as to the accuracy and proof of the quantum of any debt”, and had sold the potential claim to any debt for £70,000.
Dale told the Guardian last week that RCR Holdings, having had a £7.1m claim admitted to the Bury CVA, would still be seeking a quarter of that full sum alongside other creditors – £1.75m, despite having paid only £70,000. Frith wrote to the EFL executive chair, Debbie Jevans, last week saying the RCR Holdings deal “required investigation”, and he told the Guardian that the Insolvency Service should investigate the CVA as “standard practice”.
Frith also called for a full inquiry into the failures of football governance that led to the EFL expelling Bury, after Dale failed in the nine months since his £1 takeover to satisfy the league he had the money to sustain the club. “I expect a full investigation into the role football’s rules and regulation have played in the club’s expulsion, and will call for it in parliament,” Frith said. “I believe there needs to be a national regulator for football.”
A spokesman for the FSA, which has campaigned continually for stronger regulation of clubs’ ownership and finances, explained of its complaint to R3 and the IPA: “Football clubs are community assets established over generations that deserve greater protection. Given the calamity dealt to Bury and its supporters, we are duty bound to ensure that there is a full investigation.”
Wiseglass told the Guardian that there was evidence at Bury for admitting the debt owed to Mederco, and said no creditor had appealed against the CVA. He was, he said, “very disappointed” the club had been expelled despite agreeing the CVA, which was aimed at securing their financial stability.
“Everything relating to the CVA has been done properly, but of course I am regulated and if there is any inquiry I will deal with and cooperate with it,” he said. Dale has said: “All dealings with the CVA have been done in a correct and proper manner.”
Efforts were still being made on Wednesday to ask the EFL to reverse its decision, which has devastated Bury supporters, and to consider a lastminute offer to buy the club made by a London-based Brazilian, Gustavo Ferreira. He told the Guardian he is a pastor, and made the offer shortly before the 5pm deadline on Tuesday, in partnership with a gold mining company in Brazil, WGS Mining, of which he is a partner. Jevans said, however, that although the board would look at any letter, there is no appeal process and she suggested that the expulsion decision is very unlikely to be reversed.