Coventry council taken to court for Ricoh Arena loan

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Coventry council taken to court for Ricoh Arena loan

Postby dutchman » Tue Apr 23, 2013 10:29 am

Coventry City football club is taking the council to court over its decision to lend £14m to the firm that runs the Ricoh Arena.

Coventry City Council took out a loan in January so Arena Coventry Limited (ACL) could pay off bank debts.

Club owners CCFC Holdings said a High Court judge should rule if the council unlawfully used public funds.

The legal action is the latest turn in a row between club-owners Sisu and ACL over unpaid rent of more than £1m.

Jan Macristky, from supporters' group the Sky Blue Trust, said: "Just when we thought things couldn't get any worse, they seem to have taken a turn for the worse.

"This makes the prospect of playing at the arena next season even further away."

In a statement CCFC Holdings confirmed an application had been submitted to the High Court and added: "In the meantime, we are committed to reaching a negotiated solution to the dispute with ACL."

ACL runs the stadium on behalf of the council and the Alan Edwards Higgs Trust charity.

No one from the council was available to comment.

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Re: Coventry council taken to court for Ricoh Arena loan

Postby rebbonk » Tue Apr 23, 2013 4:22 pm

This does not reflect well on SISU. What a shower!
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Re: Coventry council taken to court for Ricoh Arena loan

Postby dutchman » Wed May 01, 2013 2:31 pm

Council accused of wanting to 'wrest control' of Coventry City FC

Coventry City Council is accused of acting unlawfully in seeking to “wrest control” of Coventry City Football Club, claim documents submitted to the High Court.

Papers served by Coventry City Football Club (Holdings) Ltd – signed by its hedge fund owner and Sisu boss Joy Seppala – also allege council executives were last year involved in talks over a joint plan to buy out the Ricoh company’s Yorkshire Bank mortgage for less than the £14million the council eventually paid for it.

That £14m taxpayer deal to alleviate financial pressure on Arena Coventry Limited was approved in January by councillors behind closed doors – after months of the club/Sisu refusing to pay £100,000-a-month rent to ACL for using the stadium, claiming it was too high.

Sisu is now seeking a judicial review over the council’s decision, claiming the high price paid for the mortgage debt and the subsequent £14m loan to ACL contravened “state aid” laws, creating unfair competition.

The public High Court papers state the council’s “clear object... was to wrest control of the club, in which the claimants have made substantial commercial investments over a period of years, from the claimants, with a view to appointing a new owner of its own choosing.

“The claimants submit that it is no part of the function of a local authority to interfere with the ownership and commercial operation of a local football club and that this misconceived project has led the defendant to act unlawfully, and/or for an improper purpose.”

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Re: Coventry council taken to court for Ricoh Arena loan

Postby dutchman » Tue Aug 06, 2013 2:26 pm

An application for a judicial review by Sky Blues' owners against Coventry City Council has been thrown out by a High Court judge.

The application by Sisu companies had accused the council of acting unlawfully in January when it bought out part-council owned Ricoh firm Arena Coventry Limited's mortgage debt from Yorkshire Bank for £14million.

The judge ruled the council acted properly following the football club's decision to withhold £100,000-a-month rental payments to ACL.

The application was taken out by Sisu companies Arvo Master Fund, Sky Blue Sports and Leisure Ltd and Coventry City Football Club (Holdings) Limited.

If they had ultimately won the review, the council may have had to reverse the £14m deal, which would have further weakened ACL's financial viability.

AN ACL spokeman said: “We note the announcement today that the High Court has dismissed the application by SISU to seek a judicial review of Coventry City Council’s decision to take over Yorkshire Bank’s loan to ACL.

"We are pleased to see that what we believe to be the correct judgement has been made in this unfortunate situation.

“Indeed, Mr Justice Males has made the reasons for his judgment very clear. We note, in particular, his reference to the withholding of lawfully owed rent by SISU as a means of exerting pressure on ACL in commercial negotiations, which had led to an unsatisfied judgment in the High Court in ACL’s favour.”

“We are also pleased that Mr Justice Males has included in his judgment the decision that ACL’s costs in relation to this dismissed case should be borne by SISU.”

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Sisu wins judicial review over Council's 'bailout' of Ricoh

Postby dutchman » Fri Nov 29, 2013 4:37 pm

Coventry City owners Sisu have won their application for a full judicial review into Coventry City Council's 14m 'bailout' of the Ricoh Arena.

A High Court judge this morning delivered her decision which could have great significance for the prospects of the Sky Blues returning to the council-owned stadium soon.

Mrs Justice Thirlwall said she was satisfied there were grounds to grant Sisu companies leave to apply for a full judicial review.

She said she was satisfied the case merited a full hearing with all the relevant evidence.

She said she was not making a decision on the timing of the full review, but she was satisfied the arguments had been made properly.

The Coventry City/Sisu companies raised four legal grounds for the case.

They concern not only "state aid", but allege the council had "overpaid" in buying ACL's bank debt for £14million - which was double independent valuations of the Ricoh's worth known to the bank.

The grounds which the judge today said were "arguable" and merited a judicial review also include that the council had acted "beyond its powers" in "bad faith" for a "improper purpose" to "remove the club's owners".

The council strongly denies the allegations and before today has argued the case should be thrown out.

It reverses an earlier decision by Justice Males in August.

James Goudie, the QC representing Coventry City Council, requested the judicial review could be scheduled sooner than the standard timescale given that the "ongoing uncertainty is not good for anyone on the ground."

The council claims the loan was made on commercial terms to protect the council's investment in ACL when ACL's bank was threatening to call in its mortgage debt.

The full council in January voted in private to buy out ACL's Yorkshire Bank mortgage and refinance it as a loan to the Ricoh firm, meaning cheaper ACL mortgage payments.

The council claims ACL could have otherwise become insolvent in circumstances where the club was withholding rent "as a means of exerting pressure in commercial negotiations".

Rhodri Thompson, QC for the Sisu companies, had told the judge the loan's real purpose was part of a "secret plan to drive us out of Coventry."

ACL in March filed for CCFC Ltd's administration in the High Court, and Mr Thompson claimed the entire plan was concocted "months before".

Mr Thompson said the Sisu companies - Arvo Master Fund, Sky Blue Sports & Leisure Limited and Coventry City FC Holdings - asserted the £14m transaction was intended to prevent a deal emerging from negotiations, which would have seen the club acquire a 50 percent stake in ACL and vital stadium revenues; bring in events management company AEG to run the stadium, and Sisu would have bought out ACL's mortgage for less than half what the council later paid - based on accepted independent valuations of the Ricoh.

The club claims the loan to ACL using council taxpayer "cash balances" was "state aid" because it interfered with fair competition between international businesses operating sporting and entertainment venues, and with the negotiations between the club, ACL and its 50percent shareholder, the Alan Edward Higgs Charity.

The Ricoh was valued at £6.4m late last year, the council's own High Court papers reveal. They state the valuation was also contained in a council report - yet councillors authorised £14m of taxpayers' money to buy ACL's mortgage.

As we previously revealed in October, an independent valuation for ACL by consultants CBRE place the Ricoh's worth at around £6million to £8m, as ACL's bank had stated.

The club and Sisu chief executive Joy Seppala have called for a freehold sale of the Ricoh and surrounding land based on current independent valuations from both sides.

The court heard the club's contention it had effectively paid two-thirds of the £1.3million rent during their "rent strike".

This included more than £500,000 of reserves withdrawn by ACL from a rent deposit account, and over £300,000 in under an "interim rent" arrangement.

Mr Thompson alleged the council's "shady" dealings saw it "riding two horses", by negotiating with Sisu while "behind their backs" the council was seeking a deal with the bank to buy out the mortgage itself.

He claimed there had been prejudice against Sisu and that council finance director Chris West later said in a minuted meeting that "hell would freeze over" before the Ricoh was sold to Sisu.

The Sisu companies allege a commercial investor would not have made the £14m transaction.

Sisu companies allege the council's justification, that it was protecting its commercial interests in ACL, was unjustified as the council's freehold ownership of the Ricoh was not under threat.

If the Sisu companies ultimately win the judicial review, it could mean ACL could be ordered to pay the £14m of taxpayers' money back to the council, which would weaken its finances.

Sisu chief executive Joy Sepalla has stated she wants to buy the freehold of the Ricoh Arena and land to "create value", support the loss-making club's revenues, and get a return on funders' "£60m investment."

She says alternatively the club will build a new stadium in Warwickshire, after playing home games at Northampton for up to five years.

Coun Ann Lucas, leader of the council said: “We are disappointed that the Judge has today allowed this Judicial Review to proceed to a court hearing, but are confident we have a robust defence to all the claims made in the JR and look forward to the court hearing that will allow us to share this defence publicly.

"Whilst the outcome of the hearing today is disappointing, it is not entirely unexpected. The judge has decided that there should be a full hearing in court. That is how it should be.

"Justice must be open and transparent. The legal advice that the Council has received is that there is merit in defending the proceedings. I have a duty to the people of Coventry to defend their assets.

"We did not want this court action, and believe no-one benefits from costly litigation that could end up costing Coventry taxpayers hundreds of thousands of pounds in legal costs alone.

"Regardless of all legal action I am happy to talk to Joy Seppala again, and her colleagues, to see if compromise can be reached. I want Coventry City Football Club to play at the Ricoh Arena, but not on terms that would not justify public scrutiny.

"What matters to us most is, in the short term, getting the Sky Blues back at the Ricoh Arena and we appeal to Sisu/Otium to get back round the table with us and talk about bringing the team home as quickly as possible so thousands of fans can once more see the team they love play in their rightful home.

"We want to rebuild a relationship of trust with the club’s owners. This is best done through a return to the Ricoh Arena. I am sure ACL will want to make it as attractive and easy as possible for Sisu/Otium to do this. We have a long way to go to rebuild our relationship, but I urge us all to start this today. I know that all councillors will support me in this, and we will do all we can to help this process.”

Statement from Coventry City: "The High Court today ruled that there were good grounds for an investigation at a full Judicial Review by a High Court Judge into the legality of the loan made to ACL and whether the Council made that loan for an “improper purpose”, namely to force the owners of the Club to sell out at an undervalue.

"In these Administrative Law proceedings, the court will review the Council’s conduct and the legality of its actions, rather than deciding a commercial dispute. The Court will consider (amongst other things) what motivated the Council to reject a deal (for which heads of agreement were signed in August 2012) by which SISU would pay off the bank debt and leave ACL debt free, in preference to the Council lending £14.4 million of public money secured on an asset which it believed at the time it made the loan to be worth around £6m.

"The Judicial Review will finally allow all the facts behind this damaging saga to be revealed to fans and taxpayers.

"Joy Seppala has made clear that we do not rule out a return to the Ricoh but the Council’s stance has compelled us to focus on progressing the plans for our new stadium in the Coventry Area. The Club needs to have control over its stadium in order to guarantee its future financially and make it free from all political interference."

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Re: Coventry council taken to court for Ricoh Arena loan

Postby rebbonk » Fri Nov 29, 2013 5:14 pm

SISU may well regret this action. It wouldn't be the first time that this type of action had blown up in the litigant's face
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Re: Coventry council taken to court for Ricoh Arena loan

Postby dutchman » Fri Nov 29, 2013 5:40 pm

Statement from the Sky Blue Trust following judicial review decision

The news that the High Court has upheld SISU’s appeal to apply for a full judicial review has been granted, whilst not unexpected, is unwelcome at a time when all involved should be focused on the best way of getting the team playing back in Coventry.

The club is dying in Northampton yet a resolution now appears as far away as ever. It again drives an unwelcome wedge between the parties and drags the whole matter out for many more months, possibly years, creating more frustration and uncertainty for the clubs long-suffering fans.

The Sky Blue Trust calls upon all parties to put this matter to one side and use the time before the hearing to work together to find a way of bringing Coventry City home.

It would be unforgivable for any of the parties involved to hide behind this Court action as a reason not to progress talks on a resolution and we would urge all involved to keep talking in a spirit of co-operation, not antagonism and recrimination. We all want the Sky Blues back in Coventry and quickly.

One question that must be asked is how does is this Judicial Review of benefit to Coventry City Football Club? The whole drawn out legal process is draining precious funds from the Council, from ACL and, we have to assume, from the Football Club itself.

Money that each party could put to far more beneficial use, be that infrastructure investment or new players. So the question has to be asked – How does prolonging this process benefit the club and the fans?

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Re: Coventry council taken to court for Ricoh Arena loan

Postby rebbonk » Fri Nov 29, 2013 6:59 pm

How does prolonging this process benefit the club and the fans?


It doesn't, but the club and the fans are not the point here and never have been. This is about money and egos; not necessarily in that order.
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Re: Coventry council taken to court for Ricoh Arena loan

Postby dutchman » Mon Jun 30, 2014 1:18 pm

Coventry City Council Ricoh Arena loan was lawful

Coventry City Council acted lawfully in loaning £14m to operators of the Ricoh Arena, a judge has ruled.

A three-day independent judicial review had been called to consider if the loan was an unlawful use of public funds.

The loan was used to allow Ricoh's operators, Arena Coventry Limited (ACL) to pay off debts.

Sisu, the owners of Coventry City Football Club, said the ruling "removed any prospect" of its long-term return to the stadium.

The club, who had called for the review, said it would apply for leave to appeal against the decision.

The rent dispute has seen the club play its home games at Northampton Town's ground, more than 30 miles (48 km) from Coventry, since August.

The leader of Coventry City Council, Ann Lucas, said the authority had "no choice" but to defend its decision in court.

"We are delighted that the judge has found the claimants' grounds for bringing the JR are totally invalid," Ms Lucas said.

"We were always confident we could robustly defend our unanimous and cross-party decision by all councillors at full council in January 2013 to support the new loan arrangement to ACL.

"The decision was taken in order to protect an important asset - the Ricoh Arena - which belongs to the people of Coventry."

The football club said the ruling meant ACL would be "burdened with debt for the next 43 years".

"With this level of debt there is no realistic prospect of any sports franchise or ACL being able to generate sufficient revenue to be commercially viable," it said.

The club insisted: "The football club and its owners believe that the loan, which exceeded the value of the stadium by almost 200%, was neither lawful nor in the interests of the supporters, taxpayers, stadium operators or the club."

However, Ms Lucas urged Sisu head Joy Seppala to consider returning to the Ricoh Arena, adding its "door remains open" to discussions.

"If Joy does not want - even now - to return the football club to its rightful home back here at the Ricoh Arena we would encourage the Football League to use its powers to ensure a rapid return to Coventry for the sake of thousands of Sky Blues fans," she said.

"We also urge Sisu to abandon further costly, lengthy and pointless appeals and focus on realistic ways of bringing the club home."

:bbc_news:
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Re: Coventry council taken to court for Ricoh Arena loan

Postby dutchman » Tue Jul 08, 2014 2:58 pm

Ricoh Arena legal row has cost Coventry taxpayers £500,000

The legal battle over the Ricoh Arena has cost Coventry taxpayers around half a million pounds – and that figure is set to rise.

Next week, during a full council meeting, councillors will be asked to sign off the decision to defend an appeal from Coventry City FC owners Sisu against a recent High Court judgment in the authority’s favour.

Coventry City Council had always refused to put a figure on how much the bitter action had cost – saying only it had run into six figures – but council documents this week reveal the full figure for the first time.

The documents show that the battle – driven by Sisu – has already cost the local authority in the region of £500,000. That’s roughly £3.70 per household.

But Sisu’s decision to appeal last week’s High Court judgment means the council’s legal bill will rise if, as expected, they agree to defend the action.

Whichever side loses at the end of the process is likely to have to pick up some, if not all, of the other’s expenses – potentially leaving the Coventry taxpayer to foot a seven-figure bill.

However, another decision in the council’s favour would likely leave Sisu to fork out for the vast majority of the legal fees.

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