No Re-Dawn of the Jed
It’s taken a while but finally there’s some much-needed certainty at the County Ground following Lee Power’s victory in the courts over former owner Jed McCrory. The decision confirms Power’s Swinton Reds 20 Ltd as the majority shareholder in Seebeck 87 Ltd, giving the current Town chairman, Power, a 99% holding in the football club’s holding company. As is customary, we reflect on these events…
The future of no football club should be decided in the High Court. The game, ultimately owned by its fans, should be won and lost on the field of play. However this is Swindon Town FC where we have a habit of enabling a judge to rule and dictate our destiny. This latest episode in the courts yielded a victory for Lee Power and the manner of his takeover; the judge summarises:
1. The claimant (“Swinton Reds”), a company owned by Mr. Lee Power, seeks rectification of the register of the defendant company (“Seebeck”), which owns 98.5% of the shares of the club. Swinton Reds claims to have acquired 99% of the shares in Seebeck from the first-named defendant, Gerard (“Ged”) McCrory.
2. In effect, this is a claim to enforce a Share Subscription Agreement dated 11th by which Mr. McCrory agreed to sell Swinton Reds 99% of the shares in Seebeck, so as to give him effective ownership of the club, subject to an option in favour of Mr. McCrory to buy back 39% of the shares in Seebeck (giving him 40% in all) at a nominal price.
3. The SSA was subject to certain conditions precedent which had to be satisfied within 14 days, i.e. by 25th April 2013. It is common ground that they were not satisfied by that date, and the principal issues before me are (1) whether the period for the satisfaction of the conditions precedent in the SSA was extended and (2) if not, whether the parties entered into a new agreement on 1st May 2013 on the same terms, but with an extended period. It is common ground that, if the answer to either (1) or (2) is yes, the conditions precedent have been satisfied in due time.
4. For the reasons set out below, I hold (1) that the period for the satisfaction of the conditions precedent was not extended by 25th April 2013, so that the SSA ceased to exist but (2) that the parties entered into a new agreement on the same terms, but with an extended period for the satisfaction of the conditions precedent, by an exchange of emails on 1st May 2013. For that reason, the claimant succeeds in the action.
Throughout the period since the parting of so-called “equity partners” (Jed’s words) back in December, it was evident then that a chasm divided McCrory and Power and this ‘Battle of the Boardroom’ would be resolved in the courts. The confusion was always why it took until 1st April 2014 for McCrory to issue proceedings if the matter was legally sound in his favour given his ‘commitment’ to the club, especially supporters; some even signing a petition demanding his return. In the end McCrory’s arguments pertaining to his dispute left the Judge Mr. N. Strauss QC unimpressed; joining many of us who can’t quite believe anything the former Chairman says.
Clearly there’s more in the background leading to McCrory to pursue this case. As much has been alluded to by Power’s post-High Court interview in which he stated to FLICWiltshire: “Lie after lie Mr McCrory has told, he’s been found out, but it’s caused the football club a lot damage over the last two or three months… We believe that, because of the other case which will follow shortly, where there is money missing from the club, we believe that it is because of that they have come up with these lies. They have tried to put three directors in, they have tried to cause all sorts of problems and these are the people that never put one penny into the club.” If these reasons are true this would demonstrate McCrory cares little about our club, for all of his camaraderie with supporters and being the self-titled ‘grassroots football fan’.
What this whole episode highlights is the abject failure of the Football League / FA to protect the best interests of clubs and their supporters when it comes to takeovers and persons able to own football clubs.
The Judgement makes plainly clear that McCrory “had no funds available”. After acquiring the club for £1 from Andrew Black and taking on a £3m liability (if he then sold his holding), McCrory took a massive punt on our finances and future without the ability to meet any running costs. Yet the takeover went through in late February without funds in place leaving McCrory (and us) hoping for a promotion through the play-offs to solve the finances.
The relevance of Power’s initial involvement was to be the ‘financial backer’ as finally McCrory had found someone willing and able – note the Football League Fit and Proper Persons Test – to become involved. The Judge summarises Power’s initial involvement and why he was needed by McCrory:
5…Mr. McCrory, together I think with some associates, acquired the ultimate ownership of the club, through Seebeck, in February 2013. At some time within a month or so after that, he was introduced to Mr. Power and there were discussions with a view to Mr. Power becoming the director of football, supervising the transfer of players so as to reduce the wage bill and introducing a loan transfer scheme, by which a group of Tottenham Hotspur players would be lent to the club for a significant period.
6. However, before any agreement could be concluded, the financial position of the club caused the Football League to threaten to impose an embargo on signing new players unless an amount of £1.2m was added to the club’s funds, apparently only for a relatively short period. Mr. McCrory and his associates did not have the funds; Mr. Power did, and the following transactions took place between 26th and 28th March 2013.
7. First, loan agreements were entered into between Swinton Reds and Seebeck, and between Seebeck and the club; Swinton Reds agreed to lend Seebeck £1.2 million, with interest of 20% per annum which was to be the liability of Mr. McCrory; Seebeck agreed to lend the same sum to the club without interest. The money was actually lent on 28th March 2013, and was repaid on 8th April 2013; this apparently satisfied the Football League.
Interestingly, we were consistently told by McCrory that the club was under an embargo by the Football League with various reasons including blaming Paolo Di Canio and debts from 1950s as reasons why Town were restricted in the transfer market. While we were told the embargo “was lifted” and Town then signed a trio from Spurs the Judge’s words imply no embargo was actually in place; which corresponds to the Football League’s own silence on this matter throughout March 2013 – which ended with them stating “We never confirm or deny the existence of an embargo. You’ll need to be guided by the club on this issue.” Ultimately, if the Football League were concerned during that period it seems it was for the failures of McCrory to provide proof of funds to ensure Town would fulfil their fixtures in 2012/13 rather than for the reasons stated at the time.
This history of Power’s involvement providing vital funds for McCrory also raises serious questions about the legitimacy of a ‘legal letter’ presented to the Supporters Club and Trust in late April 2013. In which McCrory outlined he personally had provided £1.2m of funding to the club in the form of a loan at 0% interest, repayable by end of 2015. Clearly, the Judgement outlines this money came from Seebeck 87 Ltd but originated from Lee Power, not McCrory. His motives would appear to mislead by heavily overstating his own means and therefore to justify his purchase of the club; and to suggest the club would be safe under his tenure.
McCrory, it seems, is only interested in perpetuating himself as the saviour of the club from Administration, when ultimately he couldn’t fund the club moving forwards and, if Power’s unproven allegations are true, used the club to generate significant sums. It is therefore so very sad then that a man who took many under his wing, welcomed his attention to detail to improve the supporters’ matchday experience and were ‘inittogether’ could perhaps have been misled and lied to in such a way.
The final words here are from McCrory himself when completing his takeover “We are aware of the responsibilities we face taking custody of a club with the heritage of Swindon and we take these responsibilities very seriously.” I’ll let you be the judge whether this man deserves our respect…