Swindon Town ownership wrangle back in High Court

At the High Court, a judge was told the League One side would need £2.8m cash in the four months to the end of June and had last month taken a loan from the football league to help pay the club’s wage bill.

And in the latest wrangling over the ownership of the Swindon side, Judge Nicholas Thompsell likened the club to a car speeding towards a wall with chairman Lee Power and rivals Clem Morfuni and Michael Standing pulling at opposite sides of the steering wheel. 

Mr Power had hoped Judge Thompsell would overturn an earlier injunction banning him from selling the club without the permission of alleged 50 per cent shareholder and football agent Michael Standing and another order preventing him from placing the club into administration.

Mr Power hopes to sell the Swindon side to American company AC Sports Wiltshire LLC, better known as Able and run by Boston men Bill Keravuori and John Everly. It was said the club would be sold for £1, although Able planned to invest several million pounds in the club.

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Swindon Town chairman Lee Power, photographed last year at the Exeter City match Picture: DAVE EVANS

Lawyers for Mr Standing and 15 per cent shareholder Clem Morfuni sought to block Mr Power’s attempt to lift both orders. Mr Morfuni’s company, Axis Football Investment Ltd, is keen to buy the club. It has offered to invest £250,000 – although a letter to Mr Power’s representatives asking for more details of Able’s offer had gone unanswered. 

Judge Thompsell, the deputy High Court judge hearing the case on Monday, likened the situation to a car speeding headlong towards a wall with Mr Morfuni and Mr Standing trying to pull the steering wheel one way and Mr Power attempting to turn the car the other way.

He he told lawyers Hannah Thornley, for Mr Power, and Colin West QC, for Mr Standing and Axis, in his order: “Unless one of them lets go or is made by the court to let go the car will hit the wall.” 

Judge Thompsell kept the ban on Mr Power selling the club or placing it into administration and gave him until April 30 to provide documents to help Axis finalise their bid. Axis and Mr Standing will continue to provide financial support to the club to cover cash flow. The case is expected to return before the judge in mid to late-May. 

During the seven-hour hearing, which was held over Microsoft Teams, the court heard details of the parlous state of the finances of the club, whose finance director left in recent weeks and where 90 per cent of administrative staff remain furloughed.

Ms Thornley told the court that a report by Paul Appleton, the insolvency practitioner who oversaw the administration of Bolton Wanderers in 2019, concluded that “in the absence of urgent financial support the company should cease trading and the board should consider the appointment of an insolvency practitioner to either enter formal insolvency proceedings or voluntary liquidation”. 

The club was insolvent on both a cash flow and balance sheet basis and would require £2.8m cash in the four months to the end of June. In March, the payroll bill was met in part by a loan from the football league, Ms Thornley said.

She accepted that Axis had offered to contribute £300,000, but said: “We’re talking about liabilities that are going to run into many millions in the next few months.” 

Ms Thornley described the club as “hopelessly insolvent” and said a court order placing the club into administration could be appropriate if a sale could not take place quickly. 

Administration could see the club be penalised by the league, with the deduction of a dozen or more points.

The court heard Mr Appleton had not been given the go ahead by the footballing authorities to act as an administrator for the club. Mr Power’s concerns that he could be liable for “wrongful trading” if the company continued to operate while it was insolvent were assuaged by Mr West QC, who said that the government had suspended the wrongful trading rules as a result of so many firms struggling during the pandemic.

Clem Morfuni Picture: STFC

Mr West QC, for Mr Standing and Axis, raised unanswered questions over debentures held by previous owners Sir Martin Arbib and Andrew Black and whether they were now repayable.

And the barrister said there “may well be disputes” over whether debts Mr Power claimed were owed to him could be treated so straightforwardly. It was said Mr Standing had paid around £4m in working capital loans to Swindon Town in what he thought was a 50-50 agreement with Mr Power. 

Pleading her case, Ms Thornley said the company should be run for the benefit of the creditors, as it was now insolvent, and “the best situation would be to allow a sale to Able because they are available and have done everything they need to do in order to be in a position to contract within the next financial period and they have lawyers and accountants that have dealt with things”. 

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She added: “They have done the due diligence. We have a heads of terms [the intended terms of a contract] and it is effectively ready to go.” 

That contract would see the club sold to Able for £1, although it was said to be prepared to put several million investment into the club.

Mr West QC said the sale price would render his clients’ shares valueless. He said Axis had $14m Australian dollars in the bank – roughly £8m – and said the intention was to “carry this company on as a going concern”. Mr Morfuni had already passed the league’s test as a “fit and proper” person to run a club, although Mr Power’s lawyers suggested he may need to go through this process again.

The judge questioned why Mr Power wouldn’t entertain the Axis bid to buy the club. He asked Ms Thornley: “What I don’t understand is whether Mr Power’s reluctance to engage with an Axis bid is really based on the terms of that bid...or whether it is just based on an animus – he just doesn’t trust them.”

Ms Thornley replied: “It’s not the latter, as your lordship described it, but it is both of those things to a certain extent. He doesn’t trust Mr Morfuni or Mr Standing and he doesn’t believe that the [Sales and Purchase Agreement] put forward is anywhere near as good as the offer from Able.”