The Companies Court (Marcus Smith J) has today ruled that Valeri Belokon, minority shareholder in Blackpool FC and the club’s former President, suffered unfair prejudice at the hands of the Oyston family as majority owners following the club’s promotion to the Premier League in 2010.
The Court found that, following promotion, the Oystons and their advisers
caused tens of millions of pounds to be extracted from the club improperly, by
way of purported director’s remuneration and intra-group loans, while excluding
Mr Belokon and his representatives from management. The Judge ruled that these
payments – amounting to some £26m – constituted disguised dividends. The Judge
also found that there was an oral ‘gentleman’s agreement’ between Mr Belokon
and Mr Owen Oyston, to the effect that the club would be run on the basis of
parity notwithstanding that Mr Belokon’s company was formally only a 20%
The Judge ordered the Oystons and their holding company to buy out Mr Belokon’s interests in the club for £31m, calculated on the basis that Mr Belokon should receive a sum equivalent to the disguised dividends paid to the Oystons, as well as being returned the sums for which he acquired his interest in the club. The Oystons had contended at trial that, if Mr Belokon was to be bought out, the price should be less than £1m. The Judge also ordered the Oystons to pay substantial costs (partly to be assessed on the indemnity basis) and interest.
The case has attracted widespread press attention, in circumstances where fans continue to protest Oyston ownership, including through a long-running boycott. For practitioners dealing with unfair prejudice petitions, the Judgment sets out important guidance on when payments will be regarded as disguised dividends, and on how the Court’s broad jurisdiction can take into account (on questions of both liability and valuation) an informal and non-binding agreement about how a company is to be run.
Andrew Green QC and Fraser Campbell acted for the successful Petitioner, instructed by Clifford Chance (Chris Yates, James Cranston and Emma Mack). Click here for the judgment.