Summary

With a view to satisfying a substantial judgment debt owed to the petitioner, it was appropriate to appoint receivers by way of equitable execution over certain assets belonging to the first and second respondents.

Facts

The petitioner sought the appointment of a receiver by way of equitable execution over certain assets belonging to the first and second respondents. The petitioner had been a minority shareholder in the fourth respondent, Blackpool Football Club Ltd. The first respondent company owned over 76% of the shares in the club. It owned the assets which were provided to enable the club to operate. The first respondent was owned by the second respondent. The petitioner had applied under the Companies Act 2006 s.994 for an order that the affairs of the club were being conducted in a manner that was unfairly prejudicial to its (the petitioner's) interests. Judgment was given in its favour. The first and second respondents currently owed over £25 million to it pursuant to the relevant judgment debt. The petitioner had attempted to enforce the judgment against two types of assets, namely real property and shares, notably shares in the first respondent. Charging orders and orders for sale had been obtained. However, the judgment remained unsatisfied. With a view to recovering its money, the petitioner wished, among other things, the club to be sold as a going concern. It was said that the club would be more valuable as a going concern than if it were sold on a bare asset-sale basis.

Held

It would be just and convenient to appoint a receiver by way of equitable execution when it would be difficult for the judgment creditor to enforce its judgment by other means and where the appointment of a receiver was the only realistic prospect available to the judgment creditor to enforce its judgment in the short term. The critical question in the instant case was whether there was some hindrance or difficulty in using the normal processes of execution. In relation to the assets that were unrelated to the operation of the club (the non-footballing assets), there was insufficient evidence to demonstrate that the ordinary methods of enforcement were not sufficient to realise those assets in satisfaction of the judgment debt. The evidence in support of the petitioner's application did not adequately address why it was that the enforcement orders already made had not met with success. The application would therefore be refused insofar as it related to the non-footballing assets. The position was different in relation to the "footballing assets", being the shares in the first respondent and some (but not all) of the property held by the first respondent. The appointment of a receiver by way of equitable execution in the case of those assets would achieve a real benefit and was plainly in the interests of justice. The receivers in question proposed to replace the management of both the first respondent and the club and appoint new and expert people who could run the club pending its sale as a going concern. Appointing receivers would make an enormous difference to the ability to achieve a sale on that basis. Accordingly, an order for the appointment of receivers would be made. The manner in which the first respondent had conducted its affairs meant that it was very difficult to draw a bright line between footballing and non-footballing assets held by it. To make the order workable, it should extend to all the first respondent's assets (see paras 8-9, 11, 14-15, 18-21 of judgment).

Application granted in part