Embargos, HMRC Payment defaults, non payment of wages, the usual under Dai Wrongge

[Sutekh]

Morecombe now in trouble with EFL.

Morecambe have responded:

In response to the EFL's announcement that one charge has been brought against Morecambe Football Club and two charges brought against the Club's Owner, in relation to a failure in September to replenish funds required by the EFL to be held in a deposit account following the Agreed Decision reached between the EFL and the Club in August, the Board of Directors wishes to make the following short statement:

Firstly, these are misconduct charges that have been referred by the EFL to an independent disciplinary commission to take place in the New Year. Bond Group have therefore instructed specialist sports lawyers to defend the Club's and the Owner's position at that commission.

Secondly, the Board remains focused on the priority of ensuring that Morecambe Football Club meets all its obligations, which means working with Bond Group to prevent cashflow issues and doing everything within its powers to expedite the process of finding new ownership as quickly as possible.

[Mr Angry]

Soon it is going to be easier to have a list of EFL clubs who aren't in trouble............

[RG30]

In September 2023, the Reading FC owner Mr Yongge Dai was charged with misconduct after failing to comply with the order of an independent Disciplinary Commission which required him to deposit an amount equal to 125% of the Club’s forecast monthly wage bill in a designated bank account.

The matter was referred by the League to an independent Disciplinary Commission in accordance with its Regulations and at the hearing, which took place on 23 November 2023, the EFL put forward that Mr Dai should be disqualified from all football activity, including ownership and control, for a period of 12 months.

In its submissions, the EFL also made it clear that it did not feel a sporting sanction against the Club was appropriate in this case as this was direct action being taken against the owner.

On review of all the arguments, the independent Commission were ‘unimpressed’ by Mr Dai’s failure to provide detailed evidence as to the ongoing reasons for failure to pay and as to his future intentions but felt a disqualification would not achieve the immediate objective of sourcing the required funds for the deposit account.

Therefore, the Independent Commission has determined that Mr Dai be fined £20,000 with a further £50,000 suspended and to be activated on 12 January 2024 unless the required deposit is made in full. In addition, Mr Dai is required to maintain the deposit at the levels set out previously until, at the earliest, 31 August 2024.

It is clear that the Commission are critical of his handling of matters labelling it a ‘serious case ‘and ‘deliberate misconduct.’

It is hoped this latest financial sanction, and the threat of further monetary penalties will bring a resolution to the short-term issue of funding the deposit account, which in turn should provide some re-assurance to the management, staff, and players at the Club, who continue to act as outstanding ambassadors for Reading FC, despite the challenging circumstances.

The League will have no hesitation in bringing further charges against Mr Dai if he fails to comply with the Commission’s directive and is also ready to support the Club in quickly progressing a change of control at the Club once a purchaser has been identified.

The independent Disciplinary Commission’s Written Reasons can be viewed here.

https://www.efl.com/news/2023/december/19/efl-statement--mr-yongge-dai/

[genome]

What happens to Reading if he's banned as owner?

[NathStPaul]

What happens to Reading if he's banned as owner?

One of us has to step in. Probably Ian.

[WestYorksRoyal]

Should we have a poll on whether we think he'll pay?

Casual flattery for the club more broadly. Management, fans and players "outstanding ambassadors in challenging circumstances". Are they just buttering everybody up for further punishments? "We're really sorry but we didn't have a choice".

[Winston Biscuit]

https://s3.eu-west-1.amazonaws.com/gc-media-assets.gc.eflservices.co.uk/f9367d00-9e64-11ee-a874-f95b44f643aa.pdf

[genome]

Just read. Banning him would've made the sale of the club compulsory within 28 days. Which I'm not sure would be the best thing, any chancer could pick up the club.

[Sutekh]

Out of interest has any club actually ever complied with the "deposit account" order from the FL?

Shame they can't force him to cede ownership instead of fining him especially given that I think we can be safely assured that Mr Dai will have to pay the full £70000 as he fails to comply (again) with this renewed request. Presume that will then lead to further charges levied against him and further fines greater in value than those already levied.

Then I presume that charges will also follow regarding the non payment of the aforementioned fines.

He's really into "losing face" over and over again.

[andrew1957]

Unless I am missing something this seems like very good news, as there was a concern about further points deductions for Mr Dai's breaches. Looks like common sense has prevailed and they have gone after the owner rather than the club.

[WestYorksRoyal]

Just read. Banning him would've made the sale of the club compulsory within 28 days. Which I'm not sure would be the best thing, any chancer could pick up the club.

Also, what if he didn't sell? How can you force him? Expel the club?

[Sutekh]

Unless I am missing something this seems like very good news, as there was a concern about further points deductions for Mr Dai's breaches. Looks like common sense has prevailed and they have gone after the owner rather than the club.

Reading's point deductions were never going to come from this the FL always said these charges were direct against the owner not the club per se, the remaining deductions the club will get this season will come out of the "continual failure to pay HMRC on time" hearing in the new year.

[Sutekh]

Just read. Banning him would've made the sale of the club compulsory within 28 days. Which I'm not sure would be the best thing, any chancer could pick up the club.

Also, what if he didn't sell? How can you force him? Expel the club?

Can the FL ban an owner and therefore effectively force a sale or is that just words for the ideal world and nothing more?

[WestYorksRoyal]

Just read. Banning him would've made the sale of the club compulsory within 28 days. Which I'm not sure would be the best thing, any chancer could pick up the club.

Also, what if he didn't sell? How can you force him? Expel the club?

Can the FL ban an owner and therefore effectively force a sale or is that just words for the ideal world and nothing more?

If they overreach and force a sale, a court will quash it and their powers will come crashing down. Outside of insolvency and criminal activity, there is no mechanism under UK law to force someone out of a company. That's why the most they can do to raise the stakes is threaten expulsion.

[Stranded]

So the wording of the press release is positive in terms of the EFL clearly saying they will do all they can to get a deal over the line when they get to see one but the judgement seems a little flawed.

He didn't pay in the required 125% of wages last time, so has now been fined 20k - the next 50k being suspended. So he has a choice to make - pay the initial fine and then pay the 125% or just pay 70k and not pay the 125%. 70k is the lesser of the two amounts and by the time any charges are brought and he is back in front of the panel, he may well be long gone.

So, with my Mystic Meg hat on - he won't pay the money, will take the full fine (and probably not pay it) thinking he won't be around much longer anyway and the EFL can't touch him as an ex-owner.

[WestYorksRoyal]

So the wording of the press release is positive in terms of the EFL clearly saying they will do all they can to get a deal over the line when they get to see one but the judgement seems a little flawed.

He didn't pay in the required 125% of wages last time, so has now been fined 20k - the next 50k being suspended. So he has a choice to make - pay the initial fine and then pay the 125% or just pay 70k and not pay the 125%. 70k is the lesser of the two amounts and by the time any charges are brought and he is back in front of the panel, he may well be long gone.

So, with my Mystic Meg hat on - he won't pay the money, will take the full fine (and probably not pay it) thinking he won't be around much longer anyway and the EFL can't touch him as an ex-owner.

Fine by me so long as he becomes an ex-owner.

[Sutekh]

So the wording of the press release is positive in terms of the EFL clearly saying they will do all they can to get a deal over the line when they get to see one but the judgement seems a little flawed.

He didn't pay in the required 125% of wages last time, so has now been fined 20k - the next 50k being suspended. So he has a choice to make - pay the initial fine and then pay the 125% or just pay 70k and not pay the 125%. 70k is the lesser of the two amounts and by the time any charges are brought and he is back in front of the panel, he may well be long gone.

So, with my Mystic Meg hat on - he won't pay the money, will take the full fine (and probably not pay it) thinking he won't be around much longer anyway and the EFL can't touch him as an ex-owner.

That's probably about right however they probably can't really touch him even if he stays as owner. Shame there's nothing in UK law that allows for dirctors/owners to be removed if it can be demonstrated they are utterly incompetent and therefore damaging to businesses, staff and local communities.

[Stranded]

Also, what if he didn't sell? How can you force him? Expel the club?

Can the FL ban an owner and therefore effectively force a sale or is that just words for the ideal world and nothing more?

If they overreach and force a sale, a court will quash it and their powers will come crashing down. Outside of insolvency and criminal activity, there is no mechanism under UK law to force someone out of a company. That's why the most they can do to raise the stakes is threaten expulsion.

If the results of a banning order are made clear in the regulations that the club and therefore Dai have signed up to, would that negate any legal challenge by Dai i.e. you agreed to be part of this competition, you broke the rules, you can no longer be an owner.

Of course if so, nothing to stop him removing us from the competition or just closing us down.

[PieEater]

It does seem odd that the cause of these issues is not having enough money.

So we're not going to have enough money to set aside 125% of wages in few weeks time along with another wage bill that's due and another tax bill. On top of that they want him to pay a fine.

We can barely pay the wages without delaying payment to the taxman. So these fines are just pouring salt on an open wound and I don't see how they fix anything.

I suspect he won't pay the 20k, or the 70k and just ignore them and any future fines.

[YorkshireRoyal99]

So the wording of the press release is positive in terms of the EFL clearly saying they will do all they can to get a deal over the line when they get to see one but the judgement seems a little flawed.

He didn't pay in the required 125% of wages last time, so has now been fined 20k - the next 50k being suspended. So he has a choice to make - pay the initial fine and then pay the 125% or just pay 70k and not pay the 125%. 70k is the lesser of the two amounts and by the time any charges are brought and he is back in front of the panel, he may well be long gone.

So, with my Mystic Meg hat on - he won't pay the money, will take the full fine (and probably not pay it) thinking he won't be around much longer anyway and the EFL can't touch him as an ex-owner.

That's probably about right however they probably can't really touch him even if he stays as owner. Shame there's nothing in UK law that allows for dirctors/owners to be removed if it can be demonstrated they are utterly incompetent and therefore damaging to businesses, staff and local communities.

But then what happens to said business after that? Who will be paying the bills for anyone? It's unacceptable that "regular" staff, like your admin and catering staff, are only being paid 50% of their wages, but that's still better than getting nothing. You'd suspect the only conclusion there would be forced administration, where debts grow over time.