Beer Engine

I'll repeat the question I asked a few days ago:- "It's obvious that the "appeal" is issue is a red herring which has been introduced either: (a) to sort out more fundamental problems with the deal or (b) because Pinnacle haven't raised the money. So what do you kick Mr L - ass or tyres?"

Without doubt.

Nah mate.

I have advised professionally in numerous administrations and liquidations and, believe me, accountants' habit of always thinking in terms of numbers rather than legal rights often causes last-minute problems that could so easily have been dealt with earlier on.

First off - did they spunk £500K - some here have suggested not. I don't know. The whole FL thing is astonishing. The FL statement back in April, yes April, after a forensic enquiry, explicitly set out that the "club" is comprised of three inextricably linked companies. The FL said that the 10 points deduction automatically applies and that the rest of the FL's insolvency policy also applied. From April, it was obvious to everyone who cared to look that the club faced a possible minus 25 points scenario in League 1 or relegation to League 2. How can Fry have not understood the possible ramifications of putting SLH plc into liquidation without first having exited administration with a CVA? What level of fees is he charging for this apparent lack of awareness? And how can anyone whose professed intention is to spend millions of pounds on acquiring and developing the club not have known this. My instincts tell me that an investor has dropped out and there is not enough funding in the Pinnacle Consortium. If I were MLT, I'd distance myself from this lot at the earliest opportunity.

Thank you for that intelligently constructed response - keep believing!

Fry's been taken for an idiot. He should now exclude Pinnacle and resign.

Recent non-events indicate that Pinnacle have been playing the FL and we fans off against each other to disguise the fact that they are mere wannabes. Anybody still think that the FL business was a genuine issue?

Yeah, maybe if you insist on clean works EVERY time!

What do you reckon nick - will they complete do you think?

Would you smoke or inject?

Well firstly Begbies are accountants not lawyers and secondly one of Begbies' primary duties is to get the best possible deal for creditors. Pinnacle would be crazy to rely on Begbies' say so on such a big and technical issue.

I thought there was even some conjecture about who paid the exclusivity money - someone suggested that LC might have been stung there. Who knows what's true - I certainly don't. All you can say is that if Pinnacle's handling of the whole FL issue is to be taken at face value then they and their advisers are incredibly stupid. Same old crap - different board (maybe)

Heroin

The -10 points and possibility of further sanctions was spelled out by the FL in their statement back in April. Pinnacle should never have put a bid in if they were not prepared to accept the situation. My feeling is that they've deliberately picked a fight with the FL that they know they can't win so that they can walk away with some measur eof good grace. Where's MLT?

Yes, that referee for the home leg against Derby basically allowed them to kick us off the pitch. ***t. Yeah GH and the curse of the dead Saxons too maybe ...?

I'm not interested in the blame game but we have suffered multiple whammies:- 1. relegation from the prem 2. relegation from the CCC 3. messy administration 4. 10 points deduction 5. possible further relegation or minus 15 more points even the most optimistic skate couldn't have made this up ...

Nick - SLH plc is still in administration - it hasn't been wound up yet. I think that for the club to avoid further sanctions SLH plc will need to exit administration with a CVA - even if this is just a short-term expedient.

Pinnacle must have foreseen at the outset of negotiations how the FL's insolvency poicy might play out. As usual it's ordinary people whose lives are messed up by incompetence.

The FL have formed the view that SFC Limited , SLH plc and the stadium company are "inextricably linked" - so that between them they form a single overarching entity which is Southampton Football Club. Putting SFC Limited into administration will NOT therefore result in the automatic deduction of a further 10 points. What it will mean is that BOTH SLH plc and SFC Limited will require a CVA and to have exited administration in order for Southampton Football Club to avoid further sanctions under the FL's insolvency policy - theoretically relegation to League 2 but, given that the fixture lists have been published, probably a further points deduction in League 1.

Unfortunately, that's not true. The FL's view is that thefootball club must pay a future penalty for its past misdemeanours regardless of who owns the club in the future. It's all explained quite well in the Leeds arbitration case.

If (contrary to Lynam's previous statement) the issue concerns capping the deduction at 10 points rather than trying to preserve some route by which the 10 point deduction might be overturned, then this is a very difficult issue to resolve. The FL have said that, as far as they are concerned, Southampton Football Club is comprised of SFC Limited, SLH plc and the company that owns the stadium. In the FL's view, those three companies are inextricably linked. So, if any one or more of those companies enters into administration, the FL sporting sanctions will apply to the club as whole - hence the automatic 10 points deduction. In addition the FL statement said that "the other provisions of the League's insolvency policy also apply." This can only mean that, if SLH plc fails to emerge from administration with a Creditors Voluntary Agreement, the FL must impose further penalties on Southampton Football Club - regardless of whatever ownership structure is in place going forward. The FL cannot retreat from this position without undermining the whole Sporting Sanctions regime.

I say yes - eventually - although the prospect of starting in League 1 on minus 25 points must have some bearing on valuation which in turn might affect the chances of SLH's creditors approving a CVA. We might have to be very patient.

I got the impression from one of TL's updates that the dispute between Pinnacle and the FL concerned the club's right to appeal against the 10 point deduction. If,as seems likely, it goes further than that and into the question of the CVA and a possible 15 points deduction then things get a bit more complicated. Let's assume that the FL were right and that Southampton Football Club comprises 3 or more inexextricably linked companies. Following that line of reasoning, it appears likely that the club could face a further 15 points deduction if SLH plc does not emerge from administration with a CVA. This could be the case regardless of which company owns the "new" club. That is roughly what happened with Leeds - the original Leeds company could not come up with a voluntary agreement that its creditors (HMRC in particular as I recall) were happy with - and the absence of a CVA prompted the FL to offer new Leeds the choice of relegation (to League 2) as per the FL sporting sanctions or to accept the FL's discretionary offer of no relegation but a 15 point deduction instead. New Leeds signed a compromise agreement agreeing to League 1 and 15 points deduction, waiving any rights they may otherwise have had to overturn the points deduction (as is perfectly normal in settlement agreements) - appealed to an arbitration panel under the FA Rules anyway - and lost.

The regulations could have been drafted better in the sense that they make no specific provision for a situation where the club is owned by a group of companies. That, however, is by no means fatal to the FL's application of their regulations. As you doubtless know from your legal training, the Courts will bend over backwards to give business efficacy to contractual documents regardless of shortcomings with the drafting. I don't think that fact that a QC has apparently (and wrongly in my opinion) rated the chances of an "appeal" being successful at 70% should dissuade you from trying to think the matter through for yourself. After all, your solicitor's training presumably covered some law and, as you know, different QC's often come up with conflicting opinions on the same facts and issues. They are not Gods.