Often Partisan

What’s Going On? An Analysis of Carson’s Latest Move

Lawyers representing Carson Yeung were in the High Court yesterday to make an application against Birmingham International Holdings, the receivers from Ernst and Young and the share registrars Tricor Tengis to prevent the sale of Birmingham City by EY, to force through the EGM he requested in December and to examine the share register.

It’s been almost a day since this news broke and there have been a lot of questions. I’ve spent a lot of Tuesday trying to speak to people to get a handle on what has happened, why it has happened and what the likely outcome is – and what it means for the club. As ever, where things are known facts I’ll cite them but please treat any speculation from myself with the scepticism it deserves.

What the hell is going on?

To quote President Corolianus Snow in The Hunger Games trilogy, “moves and countermoves”. The appointment of receivers by BIH means the power invested in the directors to run the company has shifted to an outside force – meaning that any directors on the board working with Carson Yeung now cannot carry out his wishes. Carson made an effort to try and stop the appointment of receivers and failed; thus he has to take the next step and limit what they can do.

The receivers are appointed by the High Court via a court order – which is not available to the public. That order limits their powers and what they can do with the receivers reporting back to the High Court for decisions in various matters. What Carson has done is to try and take away any power that they might have to sell the club – saying that it is something that should be decided by the shareholders – and by inference as the largest single shareholder something he would have a big say in. The courts need time to judge his application and thus have told him that they will consider it at a hearing on May 6; the case being booked into the High Court for 2:30pm on that day with the case number HCMP439/2015.

Until May 6, as there is a court hearing pending, the receivers cannot sell the club. I suspect (but don’t know for a fact) that they can talk to potential interested parties and conduct informal negotiations but anything that is formal would have to be held in abeyance.

I didn’t personally expect the club to be sold any time soon anyway because of the regulatory issues surrounding that so I don’t think the delay is a problem; what would be an issue is if the courts decide Carson is right and stop the receivers from selling the club – which is a possibility. From speaking to my contacts in HK by that time the receivers may have run up fees of around HK$10M (£800k) which would have to come from somewhere – if they can’t sell the club then it causes issues as there won’t be massive amounts of money to pay them.

The second thing he has tried to do is to force the EGM on the company – again this is held in abeyance until May 6. If the receivers believe it is worthwhile, they can authorise it sooner – however I do not believe that they will for one reason alone which is the regulatory difficulties surrounding the potential appointment of Joanna Wang Manli. I know that there has been a lot of talk about this on social media and the fact that there are leaks concerning it happening are worrying – one has to wonder WHO is putting the information out there and for what reason. As it has come from a pending court action one can only assume it’s come from Carson Yeung or his legal team – Peter Pannu or Isaaq Sadiq for example.

The third thing he has tried to do is to get him or an agent authorised him to examine the shareholder register. This would allow him to see exactly who owns what shares. Carson’s reasoning is that he believes the register has been altered; I’m curious as I think there may be an alternative motive we don’t know – but I wouldn’t want to speculate further on that.

So what does that mean for Birmingham City?

In the short term, nothing. As there will be no movement until May 6 then it means the receivers will continue to run BIH, and the staff at St Andrews will continue to run Birmingham City. There will be no movement on the sale of the club; however I wonder if this imbroglio will also ensure that there can be no fundraising activities by BIH also – for example, selling a stake in the club as an investment or obtaining loans – especially by selling further equity. That could be disastrous in the medium term as the team needs investment badly and I’m not sure where BIH are going to get it from. As Tom Ross said on Twitter someone at BIH needs to come out and say what their short term and medium term plans are for the club and how they are going to fund them – hopefully EY will be able to shed light on this. There are unaudited interim accounts out on Friday; those will give us an idea of the current financial situation within BIH and maybe an idea as to how much funds they can kick Blues’ way.

Will the FL get involved further?

Despite this seeming like more interference from Carson, the quick answer is no. The Football League’s concern about Carson is over the day-to-day running of the club; does he appoint the manager, does he hire/fire staff, does he set ticket prices etc. I agree with the club when they say he does none of those things and thus the FL are happy with things as they are – should that change, then there will no doubt be action but it’s worth noting it’s difficult for the FL to punish Carson – it’s much easier for them to punish the club, who don’t deserve it.

Will there be more twists in the tale?

You never can tell what is going to happen next; I cannot imagine Carson will go quietly until May, especially with his appeal due on March 11. What he is going to do I have no idea – but I take heart in one thing. In 2012, Pannu got into a lot of strife with the then auditors, BDO – as I’ve outlined extensively in “Haircuts and League Cups”. BDO were auditors, and Pannu had the power as a director then to fire them. This time, the accountants involved are receivers, and they are appointed by the courts. Pannu cannot bully EY into silence and he cannot legally withhold documentation from them – so the longer they are there, the more it is likely everything that has happened will come out. My hope is that will help finish the deed; the more evidence EY can uncover that CY is acting as a shadow director, the more hope we have that the court will deny him his application – and the more likely the club can be sold sooner rather than later.

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51 Responses to “What’s Going On? An Analysis of Carson’s Latest Move”

  • DoctorD says:

    Daniel — I don’t know what we’d do without you. Thanks for the brilliant update. This whole situation is like purgatory. The whiff of Pannu hangs over a lot of this in my opinion.

  • gerard says:

    thanks Dan- what a story you could not create a better one- another book ? on a more serious note and in pure simple terms status quo will be maintained by Ernst Young until May 6th at which time CY and I suspect PP- will have done everything and I mean everything to undermine Ernst and Young and all those who stand against CY and PP no doubt CY and PP will be using every method possible- I only hope and pray it is to no effect and CY has to endure his jail sentence with even more misery as he loses yet another court battle and PP is banished in abject failure forever and if Ernst Young find irregularities of an illegal nature may they point the finger at both CY and PP – having said that without hindrance to the future sale of our beloved club

  • Bluenosesol says:

    With the accounts being published on Friday, could this result in D-Day for the FL and any points deduction decision?

    • DoctorD says:

      Points don’t get deducted for poor accounts; they get deducted for going into administration.

      • Bluenosesol says:

        E&Y have been called in to manage a mismanaged organisation. There is confusion as to whether or not we qualify for a points deduction. If E&Y decide we are a going concern, then I am sure the FL will buy into that. If E&Y discover we are a basket case, then they will have to update the F&L and such a discovery and consequential events could push us into administration. Such a point of discovery could occure as a result of the examination of pending accounts. It is on that matter I was seeking clarification.

  • Andy P says:

    If CY’s appeal is successful and he gets back his wonga,what implications would this have on BIHL,after all he is the largest shareholder and would this decision sway the courts decision on May 6?

    • DoctorD says:

      Who knows? This is what’s so frustrating — it’s all about who plays the best legal game and who has the biggest pockets and patience

  • Oldbluenose says:

    I sincerely echo the above observation, re; without your dedication and perseverance, we would be banging our heads against brick walls, !!.

    All we can do [ as ever ] is wait and see what happens before or on May 6th,?.

    A prayer would help methinks,?.

  • Teerev says:

    Scarey,yet interesting times! We can only hope for some movement soon,even it means a bitter pill in the short term!
    As for recent results,while you can change the pattern,you can’t make a silk purse out of a pigs ear.
    It is what it is,and we are Birmingham city!!
    I have some old tickets here from Barry Frys early days when the Kop and Tilton were razed. I drove up from cornwall to watch us play the mighty Chester,york,crewe,etc.
    Much love and hope.KRO

  • KRO says:

    Whats the deal with the guy demanding to talk to you in HK Dan? Not our man Pete on the pop again i hope :)

    • almajir says:

      If you are refering to my tweets, it was someone (a former poster on here) who demanded I go to HK to “sort this out” as I “have lots of money” with which to do it.

      If I had lots of money I probably would go out there next month – not to sort things out per se, but to find out more. March is going to be a big month.

      • Agent McLeish says:

        Why don’t you set up a crowd funding thingy? I’d contribute.

        • almajir says:

          Couple of reasons

          a) It’s too late – minimum length of time for a site like Kickstarter or Indiegogo is a month and I’d need to raise it and get everything sorted within a week
          b) I wouldn’t expect people to be able to contribute that much money in a short spell of time – particularly as I’m not sure what I could do out there.

          I’d love to go back, I really would but I’m realistic.

  • Agent McLeish says:

    I suspect that E&Y will discover some ‘eye popping’ revelations and finally the truth will emerge as to why CY brought the club and why he is desperate to hold onto it. I also can’t see CY winning either his appeal or his application in May. Also, who is now paying CYs legal fees?

  • rhees says:

    Its all confusion and worry just cant understand why he wont sell better for everyone surly

    • Adam True Blue says:

      Like I speculated in an earlier post, the funds that were loaned to CY came from people’s that will want it back sooner or later, in one form or another! I still reckon CY is only a pawn in this game and is rather fond of his kneecaps..

      • chris says:

        exactly and he will fight all the way for the next tens years if need be.
        just hope it is all taken out of his hands by E&Y.

  • darren says:

    echo doctor d’s comments.

    So as some recognition of the work u do on this site I am ordering your book today

    Well done and keep up the good work, the villa mail would be lost without u!

  • The Francis Fake says:

    All Blues fans are well and truly back onboard the roller coaster again.A few weeks ago I was taking some comfort as I thought that the season was going to end in a calm finish, mid table mediocrity whilst GR steadily developed his team strategy for next season. Now we are faced with a possible domesday scenario. If everything went against us from now on it mean Carson wins his appeal in March, he successfully blocks the receiverships attempt to sell the club, the FL deduct 10 points and we are relegated without a change of ownership in sight. Oh and Villa stay up on the last day of the season. However, I am now an optimist as I feel that the downward spiral ended last year when Caddis equalised at Bolton, so I think Carson will lose his appeal, he fails to block receivers actions, FL don’t deduct 10 points, Blues stay up, the club is sold in the summer and the Vile are relegated. Interesting times ahead!

    • raymondo says:

      I think we should have a celebration on the steps leading down to the “Floozie in the jaccuzi” if Blues stay up and the club is sold. Villa fans welcome. KRO.

  • alan says:

    Great to have facts-based info! How could CY gain any material benefit from this legal battle? Is our beloved club such a prize to make the fight worthwhile for CY? No-sale = no fin benefit for CY. Forced sale = very small fin benefit for CY. w
    hat motivates him to fight? Is it sheer ‘powerlust’? How important is owning BCFC to him? Is it all ‘Face-saving’? Is he rich enough to afford to lose this fight or is he fighting for money?

    • chris says:

      no he will fight based on the chance of doing a Burnley in future years meaning just by getting to the prem the club would be worth around £60 million so he could sell and regain most of the purchase cost

  • Art says:

    Sorry to say I can’t see Carson losing his application.

    As a major shareholder he has legal rights and he is entitled to block any potential sale by voting against it.

    Tough days ahead I’m afraid.

  • richardm says:

    If EY are in the driving seat until May (but there are no funds available to pay them) – then surely this would make EY a creditor in the eyes of the law. Could they then issue a winding up order on BIHL to recover their monies anyway? This would trump any moves that Carson is trying to put in place, and would also lead to a quicker sale of the club, as it’s the only tangible asset EY could use to recover the money.

    • DoctorD says:

      Good point richardm. I think this is what each side is doing: playing a tactical game. I predict only one winner: the lawyers.

  • ChrisG says:

    If CY spent as much money on buying players as he does on legal fees we’d be top of the league!!!!

  • chris says:

    if i remember correctly we lost £10 million to June 2014.
    since then the club have cut wages etc and sold players so i am guessing we are about break even point.
    Trouble is next August we will have no parachute payment (the last payment was last month) so costs will need cutting again, surely?
    this along with E&Y costs can only mean more sales, so Gray & others will have to be sold and for probably less than the £5 million offered last month.

    • AussieBlue says:

      Richardm and Chris; in every receivership I have been involved in, the fees for the receiver are paid as top priority – ahead of tax, secured creditors, pensions, wages etc. There is money available to pay E&Y. They are Court-appointed so have great powers. No insolvency practitioner would take on a project without assurance of being paid. Some do pro-bono but it’s rare.
      We should be careful not to paint E&Y as the enemy here. They are out hope, light and way out of this crap!

      • RichardM says:

        Not suggesting they are the enemy at all – my point was if they become a creditor wanting their money paid, then in a peverse way that may actually help, especially if they are at the front of the queue of creditors. What makes you so certain the funds ARE there to pay them, a lot of people have been told things or promised things by BIHL which have never materialised, who knows what the real financial situation is? Could EY have been sold a pup?

        • AussieBlue says:

          Fair questions Richard but, no. Receivers look for realisable assets and BIHL is asset-rich but becoming cash poor. BCFC is the jewel in the crown for them and they know they are are on safe ground, Carson writ or not.

  • Blue Nose Gaz says:

    Hope one day we will find out why Yeung & Pannu are so desparate to hold on to the club at all costs.
    They must know how much they are loathed by the fans. I have been following the Blues nearly 50 years now and I know we have had useless owners over the years but these parasites are a cut above

    • DoctorD says:

      It’s obvious Blue Nose Gaz: if you forked out £81m for a football club, as Yeung did, you’d want as much of your money back as possible if it was sold.

      • Adam True Blue says:

        It wasn’t his money.. just my view, I might be wrong and if I am then I am changing vocation to ‘hair dresser’.

  • The Francis Fake says:

    CY’s assets are frozen, therefore, if the club was sold he wouldn’t have access to the cash realised from the sale of his shares unless he successfully appealed his conviction and thats why I think he is playing the long game. He also hasn’t wanted to sell BCFC unless he can obtain some extra value for the listing of BIHL. It appears that the existing board by calling in the receivers do not believe that it is possible to obtain any sum for BIHL’s listing as the terms laid out by HKSE for a re-listing are impossible to achieve bearing in mind the chequered history and missing information.

  • DaveP says:

    If only the Mail actually did some investigative journalism like yourself Dan instead of their Match Attax style of coverage

    • DoctorD says:

      DaveP – it costs time and money to do proper investigative stuff. The Mail can’t be bothered with it as it’s chasing clicks and advertizing in a purely short-term fashion.

  • zxcv says:

    Dan, I just want to thank you for a very interesting read, and may I say some very good and sensible reply’s also. I am just left wondering what the effects of the courts decision in March will have on the May 6th outcome. I can`t help but feel that it really would be game over if he lost his appeal as I think he will. I have enjoyed reading this blog today.

    • almajir says:

      It won’t be game over though mate as I think he knows he won’t win this appeal – the appeal he could win is in the Court of Final Appeal though, which will be another 18 months down the line…

      • zxcv says:

        Very good point Dan, and I agree all his hopes will be on the court of final appeal, but I have wondered ever since he lost the bail appeal why he would go to the cost of another appeal when considering the 18 months waiting time, then it surely must take him close to his full term served anyhow, More so if he is entitled to early release for good behaviour. Just a thought.

        • almajir says:

          Because he thinks he’ll get the conviction overturned, his assets back and his name cleared.

          It’s not only about the time inside, way too simplistic a view.

          • zxcv says:

            Of course, yes two very important points if he wants to stay in business.

          • RAGA DO says:

            Dan… Why is he more likely to win the appeal in 18months time than he is the appeal now

          • almajir says:

            Because the court of appeal is still stuffed with the kind of prosecution heavy judges who won’t listen to reason. Court of Final Appeal is more reasonable.

  • Blue Lizard says:

    I hope each day he is in prison he is getting his rusty sheriffs badge firmly rodgered

  • Eric says:

    Dan: I want to thank you so much for helping out Bluenoses far and wide. We understand that BCFC cannot provide us with information from HK but you are doing what you can, very objectively. to keep us informed. Thanks.

  • duchess says:

    My big question would be where did the £80M come from to buy the club? From what has been written it seems to be loans and investment via third parties? If so CY owes people a lot of money plus interest if the club is sold on without his consent for a drop down fee… CY and PP two very scared worried men if you ask me, my second question would be, why???? I think we may soon find out why a business man would pay over the odds (no business man would ever do this) for something like a football club and need it to the desperation he appears to be showing! Only one reason and one reason only you buy a business for more than its worth, especially double what it’s worth!! That reminds me, I left the washing machine on…. :-)

  • Hillfied Blues says:

    Thanks as ever Dan for the update as this is the only channel of factual info we have.
    The ideal scenario I suppose is for EY to uncover something juicy and quash any attempt by CY to have his application approved come May 6. I think that would then be game over as it paves the way for EY to actively sell the club. Either way it’s last chance saloon for CY and if his latest tactic doesn’t work he’s gone. We’re 4 years into this crap now so another 6 weeks isn’t going to hurt!

  • Duchess says:

    I have to hold my hand up and say I was wrong… I always thought this was how the club was bought but read somewhere else it was not the case!

    In reality you could say this is a brilliant way to own and future finance a football club given how much money is in HK and how many people would invest as the club grew. Two issues though, relegation and following arrest ballsed it up I guess?

  • Duchess says:

    Dare I say it may be in the long run a case of better the devil you know?


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