Judgment of Marcus Smith J (Sanction Application)

The court considered an application by court-appointed receivers for approval to sell the operational "Club" (a bundle of footballing assets) acquired by equitable execution following non‑payment under a buy‑out order made after an unfair prejudice petition under section 994 of the Companies Act 2006. The judge held that sales of momentous assets by receivers by way of equitable execution may properly be brought to the court for approval by analogy with trustees and administrators (drawing on Re Nortel and related authorities).

The court found there had been material changes of circumstance since the buy‑out order (notably persistent non‑payment and the need to package the footballing assets to obtain a marketable price) and that CPR 3.1(7) could be used to vary interlocutory aspects of the earlier order. The judge varied the 6 November 2017 order so as to enable VBFA to transfer its 7,500 minority shares directly to the purchaser and to deem that transfer to constitute the Respondents' purchase and sale for the purposes of the receivers' sale process, thereby removing a title risk that would have thwarted the sale. Finally, applying the trustee/administrator approval principles from Re Nortel, the judge approved the proposed sale to the preferred bidder and sanctioned completion with urgency.

This was an application by the Receivers (appointed by order of 13 February 2019) for the court's approval of a proposed sale of the football club as a going concern. The underlying background was an earlier first‑instance judgment (6 November 2017) in an unfair prejudice petition under section 994 Companies Act 2006 which ordered the Respondents to purchase VBFA's 7,500 ordinary shares for £31,270,000 and set a timetable for payment. The Respondents paid £10m but defaulted on subsequent instalments. Enforcement steps, including appointment of receivers by way of equitable execution, followed.

Parties and relief sought:

• Applicants: the court‑appointed Receivers (Mr Paul Cooper and Mr David Rubin).
• Petitioner: VB Football Assets (VBFA).
• Respondents: Segesta (later Blackpool Football Club (Properties) Ltd), Owen Oyston and others.
• Relief sought: (i) declaration that the receivers could and should seek the court's approval for the proposed sale; (ii) variation of the earlier buy‑out order insofar as necessary to remove any title risk attaching to the VBFA minority shares; and (iii) court sanction for the sale to the preferred bidder.

Issues framed:

1. Whether the Receivers required court approval to proceed with the proposed sale of the Club.
2. Whether the court could and should vary paragraph 1 of the 6 November 2017 order (the buy‑out order) to remove any latent entitlement of the Respondents to the VBFA shares and thus eliminate a title risk to the sale.
3. Whether, if court approval was required and the title point resolved, the proposed sale should be sanctioned.

Reasoning and conclusions:

• The judge held that sales of momentous assets by receivers by way of equitable execution are properly brought to the court for approval by analogy with trustees and administrators: the court should ensure the proposed exercise of power is within the receivers' authority, lawful, and that the receivers have rationally and honestly reached the view that the sale is in creditors' and the company's interests (following the approach in Re Nortel and related authorities).
• Paragraph 1 of the 6 November 2017 order was partly final (the substantive unfair prejudice finding and the remedy) but also contained interlocutory aspects (timing, mechanics of transfer) that could be varied under CPR 3.1(7). There had been material changes of circumstance (continued non‑payment, the need to pool footballing assets to obtain a marketable sale, and the special role of the VBFA minority holding in enabling a purchaser to acquire effectively all of the club). Those changes justified varying the interlocutory aspects of the order.
• The judge varied the order to permit VBFA to transfer its 7,500 shares directly to the purchaser as part of the receivers' sale and to treat that transfer as constituting the Respondents' purchase and sale for enforcement purposes. The variation was limited and designed to remove a practical and material title risk which would otherwise frustrate realisation.
• Applying the principles for court approval of momentous transactions (as articulated in Re Nortel and authorities on trustee/administrator approvals), the judge was satisfied that the receivers had conducted a competitive marketing exercise, selected a preferred bidder on reasonable grounds (price, proof of funds, due diligence and enforceable exclusivity), and that urgency and the club's financial needs warranted swift sanction. The sale was therefore approved.

The judge declined to re‑open the final conclusions of the unfair prejudice judgment and limited the variation to interlocutory and practical terms needed to effect the sale.

At first instance the court granted the receivers' application: it held (i) that the receivers were entitled to and appropriately sought the court's approval for the proposed sale of the Club; (ii) that, under CPR 3.1(7), the court had jurisdiction to vary interlocutory aspects of the 6 November 2017 order because of material changes of circumstance arising from persistent non‑payment and the need to package footballing assets for sale; and (iii) that it was just to vary the order so that VBFA could transfer its 7,500 shares directly to the purchaser (with that transfer treated as the Respondents' purchase and sale for enforcement purposes). Applying the trustee/administrator approval principles, the court sanctioned the sale to the preferred bidder and directed prompt completion.