Reality will drown out the noise from the north

by RICK EVERITT

 

A statement on Thursday linking a court order over the ownership of East Street Investments to a letter demanding Charlton owner Thomas Sandgaard ends his involvement might appear to mark a return to the nonsense that has plagued the club in 2020. 

 

In practice, it would be a mistake to imagine that the group fronted by Manchester’s Paul Elliott ever went away. In fact, they have been rumbling on in the background ever since Sandgaard announced he had completed his takeover of the club at the end of September.

 

Rather than the kind of distant noise which signifies the eventual arrival of a Tube train, however, this was the despairing racket kicked up by prisoners in a cell, unable to escape.

 

Individuals acting for Elliott and friends have been trying to get a statement published by the media for some weeks but couldn’t find anyone willing to touch it. That is partly for legal reasons and partly because, well, who exactly are these people now? 

 

The other party to the legal action over the fate of ESI that had been due to start on November 23rd, Panorama Magic Limited, was never likely to turn up. Indeed, Panorama defaulted on the expenses awarded against it in the previous injunction proceedings, which is why their defence of the main action has now been struck out.

 

There’s no reason to doubt Elliott’s claim that his Lex Dominus company is able to take control of ESI through the court order in their favour, because ESI is now an empty box. But that’s still not the current position according to Companies House, where Panorama remains the entity listed as having significant control of ESI. 

 

And it’s a very long way from Elliott being in a position to reverse the September sale by ESI of Charlton Athletic Football Company to Sandgaard.

 

According to Elliott: "The former directors of East Street Investments had no authority to sell anything to anyone, not least agree the sale of Charlton Athletic Football Club to Mr Thomas Sandgaard. Put simply, it was not their asset to sell.”

 

However, that would only be true if Elliott owned ESI at the point the club was sold on, whereas the court in the Southall injunction hearing in July held that the proposed deal was incomplete. Indeed, Elliott's argument with the EFL over his disqualification under the owners' and directors' test hinged on him not being the owner of ESI - and hence Charlton - already. 

 

A more effective contention would have been that the injunction issued by the court of appeal on September 17th prevented ESI disposing of its assets. However, if Elliott and co believe that to be the case then it’s baffling why they didn't go to court on that point. Instead they are in a position where they would need to take on the much better resourced Sandgaard, who has already taken ownership of the club and committed resources. He has done nothing wrong.

 

In reality it's still highly unlikely that Elliott and co want to acquire the club. This is a squabble about money that Elliott claims to have put into Charlton in the summer, particularly to allow the club to meet its payroll in May, and a search for a mechanism to obtain compensation. 

 

That significant funds were provided in one form or another was common ground in the court dispute between Panorama and Lex Dominus, with a figure of £500,000 referenced.  

However, the water was muddied when Sandgaard told the South London Press in early October that: “Since December or January no money has been put into the club. It was basically running with money from the EFL and some sponsorship money.”

 

He has since said, less definitively, that "It is with the lawyers. We are working through that."

 

One possible explanation is that £500,000 – or £700,000, as the BBC is now reporting – is not actually that significant in terms of the funding needed to operate the club, especially during the COVID-19 pandemic.

 

It might have been significant in the moment, but the club can be expected to make an operating loss of the order of £10m or more in the current financial year. Another possibility is that money was put in but then taken out or invoiced.

 

Whether Sandgaard ultimately has any obligation to make a payment to Lex Dominus or others is something for the accountants and lawyers to sort out, or ultimately the courts if the parties cannot reach an agreement.

 

For Charlton fans, it’s just noise. And while it would be nice if the nuisance was removed, we can probably just turn up the volume of the real world and drown it out. 

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