Wigan's former owner Kay asked about administration before his takeover
The former owner of Wigan Athletic, Au Yeung Wai Kay, sought to put the club into administration before he had even completed his controversial takeover, key documents reveal.
A new timeline of the Wigan takeover is pieced together in the written reasons detailing the rejection of an appeal against the club’s 12-point deduction for insolvency, a punishment that led to their relegation from the Championship.
According to the documents, which have been seen by the Guardian, Kay contacted the insolvency practitioners
Begbies Traynor about putting Wigan into administration the day before he informed the EFL that he had become the sole shareholder in the club. A week later, they were duly declared insolvent.
The documents also reveal that Kay failed to inform the club’s board of his plan for administration and that he forced out the then chairman, Darren Royle, after the board had failed to
agree to a loan agreement with Kay’s company. It also records Kay being fundamentally opposed to the restart of the Championship season after the suspension because of the Covid-19 pandemic, due to the costs he would incur.
The written reasons were compiled by an independent arbitration panel which heard Wigan’s appeal, brought by the club against the points sanction on the grounds of force majeure. Its verdict is dismissive, declaring: “The club cannot rely on force majeure because, far from acting with due diligence to avoid the happening of that event, at least one of the officials of the club – that is, Mr Kay – actively brought it about.”
Kay is reported to have approached Begbies Traynor on 23 June this year, before informing the EFL on 24 June that he had bought out a 51% stake in the club from Dr Chiu Fai Stanley Choi, the previous owner, for £20m. In February, Choi had transferred ownership of the club from his own International Entertainment Consortium to a company called Next Leader Fund, which he controlled jointly with Kay.
As Kay manoeuvred himself into sole ownership, club officials were becoming increasingly concerned over the provision of funding for Wigan’s day-to-day running. Having promised to provide funding for July’s wage bill on 26 June, by 29 June Kay suggested paying it in instalments. According to a statement given by the lead administrator, Gerald Krasner, Kay had already made clear through his solicitors that he would “not put another penny in the club”.
While the panel is highly critical of Kay, it also observes his behaviour to be a notable risk of the owner-funded model in football. “A club that is dependent on its owner or some other external funder … to bridge the gap between income and expenditure must inevitably run the risk that the funder will cease to be willing or able [whether lawfully or not] to continue to fund,”it wrote.
Wigan went into administration on 1 July and discussions between administrators and potential buyers are ongoing. Begbies Traynor and the EFL are also conducting separate ongoing investigations into Kay’s ownership of the club.
Another panel, arbitrating on the 12-point sanction levied on Sheffield Wednesday for breaching profit and sustainability rules (P&S), is critical of the EFL’s investigation into overspending at the Hillsborough club and the league’s decision to add a secondary charge of a breach of good faith, which was ultimately dismissed.
The panel cites the timeliness of the investigation and the complications added by a second charge for the decision to deduct points from Wednesday not in the season just gone but the next one, a move that kept the Owls in the Championship at the expense of Charlton. “It [would have been] inappropriate to impose the deduction in the current extended season,” the document says, “but to postpone its effect until next season when the onus will be on the club to redeem its position on the playing field.”
In its findings, however, the panel found that Wednesday officials had backdated signatures on key documents regarding the sale of Hillsborough from the club to its owner, Dejphon Chansiri, including documents regarding the valuation of the deal itself. The changing of the dates meant that Wednesday passed P&S tests they would otherwise have failed.