The Insolvency Practitioners Association has announced it will investigate the company voluntary arrangement organised to cut the debts of Bury, who were expelled by the English Football League on Tuesday. The IPA said its decision to “consider the operation of the CVA”, followed concerns expressed in the Guardian by the Bury North MP, James Frith, and the Football Supporters’ Association.
Frith has said he assumes it will also be “standard practice” that the Insolvency Service, a government agency, will investigate. Frith’s and the FSA’s concerns centre on a £7m claim admitted into the CVA as a debt owed by Bury to a company, Mederco, owned by Stewart Day, the club’s former owner, which collapsed into administration in February.
In December, shortly before Day declared insolvency at Mederco and several other of his property companies, he sold Bury for £1 to Steve Dale, the owner in whose tenure the 134-year-old club has been expelled. In July Dale, who never satisfied the EFL that he had the necessary money to pay the club’s debts and run it, worked to secure the CVA, which offered creditors 25p for every pound owed.
The insolvency practitioner supervising the CVA, Steven Wiseglass, included in Bury’s total creditors a £7.1m debt stated to be owed to Mederco for loans to the club during Day’s ownership. Creditors were told that this debt had been bought by RCR Holdings Ltd, a company formed two days before the meeting to consider the CVA. The scale of the £7.1m debt was crucial to the CVA being passed.
Last week the sole owner and director of RCR Holdings, Kris Richards, 41, confirmed to BBC Radio Manchester that he is the partner of Steve Dale’s daughter.
The Mederco administrator, the firm Leonard Curtis, had told that company’s creditors that it could not establish how much money, if any, was owed by Bury. It said there was a “lack of evidence as to the accuracy and proof of the quantum of any debt” and had sold RCR the potential claim to any debt for £70,000.
Dale told the Guardian last week that RCR Holdings, having had that £7.1m admitted to the Bury CVA, would be seeking a quarter of that full sum alongside other creditors – £1.75m, despite having paid only £70,000.
The IPA responded by saying it was issuing a statement, announcing an investigation into the Bury CVA, following the Guardian’s report of Frith’s and the FSA’s calls for an inquiry.
“CVAs are a debt repayment solution that allows companies in debt to pay creditors over a fixed period,” the IPA said. “CVAs are stringently regulated and should command the highest level of diligence from insolvency practitioners [IPs].
“The IPA takes concerns arising from insolvency procedures extremely seriously and can confirm that, due to information that has been brought to its attention, and in line with processes to regulate IPs, it is considering the operation of the CVA relating to Bury football club.”
Wiseglass told the Guardian on Wednesday that he had admitted the Mederco £7.1m debt because there was evidence at Bury for doing so. “Everything relating to the CVA has been done properly,” he said, “but of course I am regulated and, if there is any inquiry, I will deal with and cooperate with it.”
Dale has said: “All dealings with the CVA have been done in a correct and proper manner.”
The FSA had written to the IPA and R3, the insolvency practitioners’ trade association, expressing its concerns, as the representative body for Bury’s and all other English clubs’ affiliated supporters’ trusts and groups. R3 responded by making clear it does not have regulatory authority.
An FSA spokesman welcomed the IPA’s announcement, saying: “We have been in direct contact with the IPA today, and we feel assured that this will be a thorough investigation, as the insolvency of a football club requires.”
The EFL on Thursday confirmed to Bury that it would not reconsider the expulsion. The club said: “This is something we are struggling to comprehend as the new bidder has proven significant funds to the EFL, funds to allow them to take over, run and secure the long-term future of Bury.”
Frith called it a “striking blow”, saying in a tweet: “We’ll up the ante now with Parliamentary & legal action.”
The Guardian has learned that the new bidder named in the letter sent to the EFL on Wednesday is a Brazilian pastor called Gustavo Ferreira.