Hereford United - Council promised "payment in full"

United fans protest ahead of the St Neots game

United fans protest ahead of the St Neots game

First published in News
Last updated
Hereford Times: Photograph of the Author by , Reporter

HEREFORDSHIRE Council says it is still preparing for a winding up order to be taken out against Hereford United next month – despite an “assurance” from the club that its debt to the council would be paid in full.

 The Hereford Times has learned that this “assurance” was offered by Hereford United chairman Andy Lonsdale in a phone call to the council’s director of places and communities Geoff Hughes  late on Friday.

Around £65k in rent arrears, business rates and legal fees is owed to the council by the club.

 As at close of business today (Monday), no payment towards the debt had been made.

A memo has been sent to councillors  saying that, following the rejection of the Company Voluntary Agreement (CVA), the council’s position over the club had not changed.

That position has the council not making any move over the leases on Hereford United’s Edgar Street ground until the outcome of the winding up hearing set for September that, at this stage, the council still expects to go ahead.

Despite the rejection of the  CVA, and insolvency practitioner Marc Landsman telling United’s shareholders last Friday he expected the club to be in compulsory liquidation on September 1, United director John Edwards was still talking up the club’s future earlier today with reference to a “meeting with investors over the weekend.”  

The council is already under pressure from members to hold an “official investigation” into the authority’s part in the crisis at Hereford United .

Some councillors say serious consideration has to be given to bringing Hereford United Supporters Trust “to the table”  for talks on realistic takeover terms.

There have even been calls for an outside agency to investigate any culpability the council may have.

All councillors  have been e-mailed  allegations from parties working on behalf of the supporters trust  that questioned the validity of the club’s share issue and related claims on ownership of the club.

 At the  centre of these allegations are the club’s Articles of Association as a company, with the concern raised being that the share capital of the company could not legally be increased without amending  the Articles of Association – effectively the constitution under which the club operates as Hereford United (1939) Ltd.

The allegations outline a restriction placed on the number of shares that may be issued – 40,000 in the case of Hereford  United (1939) Ltd.

While the 2006 Companies Act allows companies no restriction on the number of shares, companies  such as Hereford Utd (1939) Ltd can operate with these provisions if they adopt updated Articles  of Association to include changes introduced in 2006.

The club is accused of not adopting new Articles of Association ahead of the share issue.

In July last year, the club’s directors issued documents that announced a proposal to increase the share capital from the existing 40,000 to a figure of around six million.

The allegations raise questions about the accuracy and legal validity of the documentation to the extent  that any shares supposedly issued above the existing 40,000 could have their legal basis challenged.

Such a scenario  opens up to doubt claims to the ownership of Hereford United (1939) Ltd through a majority shareholding, and the vulnerability of such claims to a legal challenge.

The council has admitted that no “separate” due diligence report was done on the financial state of Hereford United ahead of the ground leases being re-assigned.

In response to members questions, a meeting of the full council was told that an “appropriate level” of due diligence was carried out.

As also reported by the Hereford Times, one of the three people to sign off the Heads of Terms for the re-assigned leases at Edgar Street was the former chief executive of Hereford Futures, Jonathan Bretherton.

Mr Bretherton’s signature is the first on the document, with the signatures of Geoff Hughes, Herefordshire Council’s director of places and communities, and David Keyte, then owner of Hereford United below.

Mr Bretherton signed on April 26 2012 and Mr Hughes and Mr Keyte on April 30 2012.  

Hereford United and Herefordshire Council are closely entwined as tenant and landlord respectively.

The Hereford Times has revealed that the now wound up Hereford Futures (HF) helped Hereford United identify potential development partners for the club’s Edgar Street ground.

An HF business plan from 2011 reveals the role of the “arm’s length” company set up by Herefordshire Council also played in advising the council over the future for the ground and to lead negotiations with development partners.

The report - confirming a direct link between the council, the club and HF - refers to the ground as “generally in a state of considerable disrepair” with the club constantly facing the challenge of maintenance to a standard required by the Football League and other statutory authorities.

Then, the new owners of the club - David Keyte and Tim Russon - were pitched to the council as “ambitious to realise the club’s fullest potential”.

That acquisition of the club in 2010 and subsequent buying of debt is said to have “cleared the way” for HF to lead negotiations with the club on the council’s behalf over redevelopment.

The report says the club had appointed “professional advisers” with HF supporting the club’s work in identifying potential development partners and “suitable uses” for the ground.

As reported by the  Hereford Times earlier this year, Herefordshire Council has paid out nearly £3 million in financial support to HF over years.

The council has denied that the sum shows HF as having been “exclusively funded” by the public sector, either directly or indirectly, throughout its existence.

As reported by the Hereford Times, the council is to consider terminating the ground leases with reports on options open to the council to resolve the crisis at the club are being prepared for council leader Tony Johnson to decide on or after July 25.

So far, the council has refused to comment on the detail of termination - or other options that may be under consideration - beyond confirming what information the Hereford Times had.

Behind the scenes at Brockington there is frustration that financial assurances offered by the new owners of the club have not yet been made good.

The Hereford Times has revealed that a senior council officer had met with former Swindon Town chairman Jed McCrory in February to directly “explore” the leases on Hereford United’s Edgar Street stadium.

The meeting was set up at the request of former Hereford United chairman David Keyte.

In a statement the council confirmed that Mr McCrory met with one senior officer to “explore” the terms and conditions of the leases on the ground.

As also reported by the Hereford Times, Mr McCrory and Hereford United's former owner  Tommy Agombar were involved in a company at Swindon Town called Seebeck 87.

Mr Agombar was subsequently ruled of owning the club for failing the Football Association’s “fit and proper” test.

While the council is the landlord of the Edgar Street ground, it does not have any direct control or involvement in the club and its decisions.

Two leases refer to redevelopment of the Meadow End and Blackfriars End and stipulate that any proceeds be re-invested in the ground and its facilities.

The council is considering a request by the new owners for a transfer of those leases to a holding company within their ownership. 

Around £65k in rent arrears, business rates and legal fees is owed to the council by the club.

As yet, no related repayments have been made despite the council accepting assurances from the new owners that all outstanding monies will be paid up.

The council was not on the list of Hereford United’s creditors put to the previous High Court winding up hearing, and the council says it doesn’t know why not.

The High Court adjourned a winding up order sought by United’s former manager Martin Foyle and gave the club another three weeks of life to put a Creditors Voluntary Agreement package in place.

Within the council there is a willingness to wait until the latest three week High Court deadline is up before taking further action over what is owed, so the authority will know where it stands.

As renegotiated, the leases on the ground continue to be held by the club.  If the club folds the leases would revert to the council.

Assigning the Edgar Street leases – one for 75 years on the ground and terracing to the west, the other for 33 years for the stand and parking area to the east and both dating from 1982 - was one of the last big deals done by the former Hereford City Council.

During the late 1990s, with United facing severe financial problems, the leases were reassigned to property developers in return for a £1m capital injection into the club.  

The money was made available through two companies, the BS (Bristol Stadium) Group and Chelverton.

BS and Chelverton took equal ownership of a special purpose company called Formsole Ltd which made the investment and held the leases – as the tenant under both – with the club holding sub-leases.  

By August 2001, BS had sold its “loan” to Chelverton which ran into trouble little over a year later when control of the leases passed to Carillion Richardson.

United still owed £1m plus interest to Formsole which stayed solvent when Chelverton went into liquidation.  

The reassignment of the leases was supported by Herefordshire Council when it took control of the former city council’s affairs.

Getting the leases back was pitched as a political priority when the news broke in April 2010 that then United chairman Graham Turner and vice chairman Joan Fennessy were ready to sell their majority shareholding in the club.

The club began negotiations with Carillion Richardson for the return of the leases almost as soon as the Keyte-Russon takeover was completed in June that year.

That deal was done by December with the club paying £452,000 to secure the return of the leases and settle a £1,069,500 debt to Richardsons Developments, clearing the way for a new single lease and the development opportunities that could bring.

The deal was intended to offer the club security for the next 30 years and ensure future re-entry to the Football League - which requires a 25-year secured tenancy.

It also opened up opportunities for grant funding for any future development - £400,000 in the Conference and £750,000 in the Football League.

The council was ready to allow an extension to the new stadium lease of 250 years once development at either end was underway, with proceeds from the sale of development areas held in a joint escrow account.

That money was intended for the construction of two new stands - one at each end of the ground - and modernisation work on the existing stadium.

The council has conceded the appearance of  having “wholly funded” HF since 2012.

HF was set up by the council in 2010 as an “arm’s length” company to drive redevelopment in the city.

It was a successor to Edgar Street Grid (Hereford) Ltd.

In May last year, the council confirmed HF was being wound up.

The company – with the council acting as guarantor – was not subject to audit and accountancy obligations that apply to regulated local authority companies, nor was it covered by Freedom of Information regulations.

Figures produced for a council scrutiny report show the council’s total contribution to HF from 2004-05 to 2014-15 to be £2,891,556, with a peak annual contribution of £409,405 in 2012-13.

Support over the last financial year is shown as £355,322, reducing to £130,628 in 2014-15.

The council  funded a five-figure pension contribution to the chief executive of HF.

In the year ending March 2013, HF made a contribution of £31,392 to chief executive Jonathan Bretherton, compared to £12,667 in the previous financial year.

The council has conceded that as the sole funder, to all intents, of HF since 2012 it had, in effect, funded the payment.

But the payment, the council said, was a decision for HF recommended by the remuneration committee and sanctioned by the HF board.

The council says it was for the HF board to determine how to reward its chief executive, and he had advised officers he exercised a contractual option to waive salary and to take payment as an additional pension contribution instead.

Concerns were  raised over any “residual liabilities” in relation to this pension with HF wound up.

Councillors and the council’s former chief executive attended HF board meetings, with the council saying that any councillor who attended an HF board meeting would have done so only “in their capacity as a director of the company”.

In March, the council effectively ruled out  further scrutiny investigations into issues around HF with a tacit acceptance that “things could have been done better.”

Meetings and telephone conferences between the council and representatives of Hereford United have gone on since January without minutes being taken.

 Amongst those present at these meetings were council chief executive Alistair Neill, leader Coun Tony Johnson, Coun Bramer, Mr Hughes, Mr Bretherton, Mr Lonsdale, Mr Agombar, and Mr Keyte, senior council officers and solicitors.

Comments (9)

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5:56pm Mon 18 Aug 14

A.Non01 says...

Herefordshire council should, on behalf of it's taxpayers be adding themselves to the winding up petition being heard by the High Court on Sept 1st.

I would also urge the several football creditors who still have sums owed to them to do the same.
Herefordshire council should, on behalf of it's taxpayers be adding themselves to the winding up petition being heard by the High Court on Sept 1st. I would also urge the several football creditors who still have sums owed to them to do the same. A.Non01
  • Score: 7

7:40pm Mon 18 Aug 14

Rumps123 says...

Interestimy article but not the big one.

The big scoop is that in February 2014 the council and the football club nationalised the leases and appear to have agreed new leases for the three plots of land.

Yesterday Bulls News posted a link to area one which is a fairly standard lease for 30 years. There is no link to the leases for areas two and three.

Leases for more than seven years shuld be registered at the Land Registry. The new leases are not.

Instead an agreement for a lease made at exactly the same time has been registered.

It doesn't take a rocket scientist to work out that it is the agreement for a lease that sparked the gold rush.

My educated guess is that the agreement for a lease says that if the football club finds a developer and a development acceptable to the council, it can have a long lease.

No developer is going to pump millions in on the basis of a thirty year lease.

So follow the link on Bull News and you will get the title numbers for the three plots of land. You can then do land registry searches for the three plots of land which will disclose the agreement for a lease.

Then ask the council what the terms of the agreement for a lease are. My money is on them refusing to tell you. They think no one knows what is going on.

The agreement for a lease is the big one. If you aren't prepared to investigate it then don't complain when someone else does and beats you to the scoop.
Interestimy article but not the big one. The big scoop is that in February 2014 the council and the football club nationalised the leases and appear to have agreed new leases for the three plots of land. Yesterday Bulls News posted a link to area one which is a fairly standard lease for 30 years. There is no link to the leases for areas two and three. Leases for more than seven years shuld be registered at the Land Registry. The new leases are not. Instead an agreement for a lease made at exactly the same time has been registered. It doesn't take a rocket scientist to work out that it is the agreement for a lease that sparked the gold rush. My educated guess is that the agreement for a lease says that if the football club finds a developer and a development acceptable to the council, it can have a long lease. No developer is going to pump millions in on the basis of a thirty year lease. So follow the link on Bull News and you will get the title numbers for the three plots of land. You can then do land registry searches for the three plots of land which will disclose the agreement for a lease. Then ask the council what the terms of the agreement for a lease are. My money is on them refusing to tell you. They think no one knows what is going on. The agreement for a lease is the big one. If you aren't prepared to investigate it then don't complain when someone else does and beats you to the scoop. Rumps123
  • Score: 18

11:08pm Mon 18 Aug 14

Brownface60 says...

Assurances have been given. So we - and the council - can rely on them, then?
Assurances have been given. So we - and the council - can rely on them, then? Brownface60
  • Score: 6

10:18am Tue 19 Aug 14

mizza21 says...

Great piece again Bill.
Bretherton and HF and the council had snouts in the trough.

Rumps123, my gut feeling is probably the same as yours. This shower want to relocate the club and develop the ground to make a load of money. All of their behaviour so far indicates this.
HUFC will be in the Southern League for a few years while this is achieved behind the scenes whilst telling us lies to our faces.
The council must be pressurized as they are the key to this.

Support the HUST boycott
Great piece again Bill. Bretherton and HF and the council had snouts in the trough. Rumps123, my gut feeling is probably the same as yours. This shower want to relocate the club and develop the ground to make a load of money. All of their behaviour so far indicates this. HUFC will be in the Southern League for a few years while this is achieved behind the scenes whilst telling us lies to our faces. The council must be pressurized as they are the key to this. Support the HUST boycott mizza21
  • Score: 15

11:12am Tue 19 Aug 14

yokelyokel says...

I think the HT should acknowledge it's source for the last two paragraphs. This information was extracted from the council by a FoI applicant via the website 'whatdotheyknow' and reproduced on Herefordvoice with an acknowledgement.

Finally an issue of wide interest looks like shining a light on the unrecorded and unaccountable decision making in the council.

Excellent work also by Rumps123
I think the HT should acknowledge it's source for the last two paragraphs. This information was extracted from the council by a FoI applicant via the website 'whatdotheyknow' and reproduced on Herefordvoice with an acknowledgement. Finally an issue of wide interest looks like shining a light on the unrecorded and unaccountable decision making in the council. Excellent work also by Rumps123 yokelyokel
  • Score: 5

11:45am Tue 19 Aug 14

bobby47 says...

Well I'm going. I'll be damned if I don't! And what's more, if a gathering of the Boycott'ers manage to locate me, restrain me and tether me upside down from my ankles and affix me to the bloody floodlights, I'll say, 'lovely, I can see the game fine from here thank you very much. Clear off and leave me to support my Club'.
They'll soon discover that trying to stop me watching my team play will be like trying to get Kerry Katona to stop indulging in childbirth. I'll be damned if I stay away anymore!
And HUST can send their finest negotiators to my house pleading with me to rejoin the noble cause and help place my team in the Hereford Sunday bloody League and I'll tell them to, 'be gone. Go bother someone else'.
They can even resort to dipping me in a barrel of Lugg water and poking me with a Cattle Prod and I'll howl with glee throughout the entire terrible ordeal screaming, 'turn the voltage up. I'm having the time of my life thank you very much'.
Nothing will stop me going to the game! Nothing! They can get a binding order from a High Court Judge that says, 'if you go to another game you'll have the lads jumping up and down and stamping their feet all over your fat face', and it'll mean nothing to me. I'm going to the bloody game and when I get out of the ground after some Good Samaritan alerted the Emergency Services to the fact that despite the game ending an hour ago, I was still suspended from the lights, I'm going to do what I usually do.
Go to an ale house, sink a dozen pints, get my large mixed kebab and stagger back home to be met by my wife who'll do as she normally does. Hit me in the face with her frying pan.
End the boycott and go to the game!
Well I'm going. I'll be damned if I don't! And what's more, if a gathering of the Boycott'ers manage to locate me, restrain me and tether me upside down from my ankles and affix me to the bloody floodlights, I'll say, 'lovely, I can see the game fine from here thank you very much. Clear off and leave me to support my Club'. They'll soon discover that trying to stop me watching my team play will be like trying to get Kerry Katona to stop indulging in childbirth. I'll be damned if I stay away anymore! And HUST can send their finest negotiators to my house pleading with me to rejoin the noble cause and help place my team in the Hereford Sunday bloody League and I'll tell them to, 'be gone. Go bother someone else'. They can even resort to dipping me in a barrel of Lugg water and poking me with a Cattle Prod and I'll howl with glee throughout the entire terrible ordeal screaming, 'turn the voltage up. I'm having the time of my life thank you very much'. Nothing will stop me going to the game! Nothing! They can get a binding order from a High Court Judge that says, 'if you go to another game you'll have the lads jumping up and down and stamping their feet all over your fat face', and it'll mean nothing to me. I'm going to the bloody game and when I get out of the ground after some Good Samaritan alerted the Emergency Services to the fact that despite the game ending an hour ago, I was still suspended from the lights, I'm going to do what I usually do. Go to an ale house, sink a dozen pints, get my large mixed kebab and stagger back home to be met by my wife who'll do as she normally does. Hit me in the face with her frying pan. End the boycott and go to the game! bobby47
  • Score: -7

5:10pm Tue 19 Aug 14

redyoll says...

The penalty shoot is about to begin. I see Tony Featherstone shaking hands with Tony Johnson and he is now being patted on the back by Alistair Neill. Geoff Hughes sinks to his knees looking for divine intervention.
Tony J slips on his gloves. He looks nervous. His future could be at stake. It's his job to save Edgar Street and stop the leases. Can the Council win and fulfill their promise that they can terminate the three leases if HUFC goes into liquidation.
The referee blows his whistle............ More next week.
The penalty shoot is about to begin. I see Tony Featherstone shaking hands with Tony Johnson and he is now being patted on the back by Alistair Neill. Geoff Hughes sinks to his knees looking for divine intervention. Tony J slips on his gloves. He looks nervous. His future could be at stake. It's his job to save Edgar Street and stop the leases. Can the Council win and fulfill their promise that they can terminate the three leases if HUFC goes into liquidation. The referee blows his whistle............ More next week. redyoll
  • Score: 3

5:08pm Thu 21 Aug 14

wyesider says...

yokelyokel wrote:
I think the HT should acknowledge it's source for the last two paragraphs. This information was extracted from the council by a FoI applicant via the website 'whatdotheyknow' and reproduced on Herefordvoice with an acknowledgement.

Finally an issue of wide interest looks like shining a light on the unrecorded and unaccountable decision making in the council.

Excellent work also by Rumps123
Yes, very interesting points.
As a supporter who has not attended this season, I wonder what will happen if the club manages to survive the 'winding-up' petition in the High Court?
Obviously, the club will still be in the Southern League ( 2 leagues below where they should be) but will any attempt be made by the club hierarchy to begin any form of dialogue with the supporters boycotting the games?
As Yoyelyokel and Rumps123 indicate, a great deal is going on that we don't know about, but what does the future hold for those loyal supporters who are finding it impossible to enter the ground at present?
[quote][p][bold]yokelyokel[/bold] wrote: I think the HT should acknowledge it's source for the last two paragraphs. This information was extracted from the council by a FoI applicant via the website 'whatdotheyknow' and reproduced on Herefordvoice with an acknowledgement. Finally an issue of wide interest looks like shining a light on the unrecorded and unaccountable decision making in the council. Excellent work also by Rumps123[/p][/quote]Yes, very interesting points. As a supporter who has not attended this season, I wonder what will happen if the club manages to survive the 'winding-up' petition in the High Court? Obviously, the club will still be in the Southern League ( 2 leagues below where they should be) but will any attempt be made by the club hierarchy to begin any form of dialogue with the supporters boycotting the games? As Yoyelyokel and Rumps123 indicate, a great deal is going on that we don't know about, but what does the future hold for those loyal supporters who are finding it impossible to enter the ground at present? wyesider
  • Score: 2

5:54pm Fri 22 Aug 14

probono says...

Was that a pink pig that went flying past, and here's me thinking it was a Chinook
Was that a pink pig that went flying past, and here's me thinking it was a Chinook probono
  • Score: -1

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