The Intrigue Surrounding Karl Oyston’s “Bankruptcy”

The Intrigue Surrounding Karl Oyston’s “Bankruptcy”

By on Sep 17, 2010 in English League Football, Latest | 0 comments

Blackpool Football Club’s first season in the top division of English football since 1971 has started reasonably well, but the last few months haven’t necessarily have gone quite as successfully for their former chairman, Karl Oyston. While his team has only lost one of its four Premier League matches so far this season and currently sits in fourth place in the table, Oyston has faced difficulties in his private life and resigned as the chairman of the club last month. This week, however, the Premier League confirmed that they are to investigate his ongoing role as the club’s acting Chief Executive after he was reportedly declared bankrupt last month and was, under Premier League and FA rules, forced to resign his position as the chairman of the club.

The Oyston family are no strangers to controversy or indeed the courts. Oyston’s father, Owen, was also the chairman of Blackpool during the 1990s and was imprisoned in May 1996 for six years, having been found guilty of the rape of a young model. He appealed the case but the conviction was upheld in December 1997 and he was made to pay £100,000 in court costs. He engaged the services of Max Clifford ahead of the trial with a view to improving his image. As this remarkable little tidbit from Marketing Week in July 1997 states:

Clifford is understood to be preparing a PR offensive that will portray the multimillionaire as a loveable rogue, rather than as a predatory old man. The publicist plans to plant stories in the tabloid press with women he has slept with in the past who will talk about him as an understanding lover.

He also settled out of court after a civil claim was brought against him by the victim of the attack in 1999. In spite of this, however, Owen Oyston continued to proclaim his innocence and took the matter to the European Court of Human Rights, where his appeal was rejected again in 2002. Chairmanship of the club passed to his wife, Vicki, and then on to Karl. Owen retained his position as a director of the club because because, when the Fit & Proper Persons Test was introduced in 2004, it wasn’t applied retrospectively.

Yet something is going on regarding the bankruptcy of Karl Oyston. For one thing, the Oyston family (Karl included) has regularly appeared on the Sunday Times Rich List in recent years. Here they are in 2008. So how could Karl Oyston have ended up bankrupt when his “family fortune” was listed at £105m as recently as April 2008? The answer to this may even be that he is not bankrupt. It has been reported as fact that he is, to the extent that various newspaper reports have given a discharge date for Karl Oyston of the 18th August 2011 (subject to any irregularities, bankrupts are discharged one year after the date of their insolvency) and this was confirmed on the Insolvency Service’s online register as recently as yesterday. Today, however, the entry has gone, which is likely to mean that the bankruptcy has been (or has been applied to be) annulled. The 1986 Insolvency Act is very clear about the circumstances under which a bankruptcy can be annulled:

  • the bankruptcy order should not have been made, for example because the proper steps involved in obtaining the order were not followed
  • all bankruptcy debts and the fees and expenses of the bankruptcy proceedings have been either paid in full or guaranteed to the satisfaction of the court
  • the defendant has reached an agreement called an “individual voluntary arrangement” (an IVA) with their creditors to repay all or part of their debts.

If he has entered into an IVA, this will be reported in the fullness of time on the Insolvency Service’s online register. Alternatively, it is possible that Oyston applied for what is called a “stay of advertisement”, whereby notification of the bankruptcy can be removed from the Insolvency Service’s register and will not be advertised in the London Gazette (a standard part of the normal bankruptcy process) if the defendant can prove that they have a case to apply for an annulment of their bankruptcy. If the bankruptcy is cancelled because of payment of debt or the making of an IVA, the record of the bankruptcy cancellation will be removed from the public register two years after the cancellation date. If the bankruptcy is cancelled because it should not have been made, the record will definitely be removed immediately.

It seems a remarkable coincidence that any mention of Karl Oyston’s insolvency has been removed from the Insolvency Service’s register within a day or two of the Premier League confirming that they would be investigating Oyston’s continuing involvement at Blackpool Football Club. Since resigning as chairman, Oyston has stayed on at Bloomfield Road as “Acting Chief Executive”, but the Premier League have clearly become concerned that he is acting as a shadow director, which may be defined as a person not formally appointed as a director, but in accordance with those directions or instructions the directors of a company are accustomed to act. Moreover, an undischarged bankrupt may not act as the director of a company or act as a shadow director. A shadow director, though not registered as a director at Companies House, is treated for all insolvency purposes as if he were an actual director of the company. In a legal case related to shadow directorships heard in 1990 (Re: M C Bacon Ltd), Judge Millett gave two examples of a shadow director as being:

  • The fraudster who operates through shelf companies controlled by nominees
  • The bankrupt (or disqualified director) who continues to manage a company through their spouse.

Considering that Karl is the third member of the Oyston family to have acted as the chairman of Blackpool Football Club since his father took control of it in 1988, it would not necessarily be surprising to learn that he had been acting as a shadow director of Blackpool Football Club since his insolvency event took place last month and it would have been similarly unsurprising if the interest of the Premier League in his position had alerted the Insolvency Service to carry out an investigation into what has been going on at Bloomfield Road over the last few weeks themselves of their own. Could this have been the reason for an annulment, presuming that an annulment has been granted in the case of Karl Oyston’s bankruptcy?

This is of course, little more than speculation and it will all be irrelevant if Oyston’s bankruptcy has been annulled or is going to be annulled in the very near future. It is ironic that Karl Oyston should have found himself under the scrutiny that he has. His £10,000 per week ceiling on wages at Blackpool earnt the club considerable respect amongst the supporters of other clubs for (whether tacitly or not) acknowledging that the absurd wage inflation in football cannot continue and that smalller clubs have to cut their cloth accordingly rather than running up debts in the pursuit of what may or may not be defined as “success”. This, however, all leaves a slightly bad taste in the mouth. Blackpool Football Club should clarify whatever the hell has been going on concerning this matter over the last few weeks with immediate effect. In the meantime, it is encouraging to see any examples of the football authorities ensuring that their rules are upheld.

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