Mike Ashley’s Frasers Group has taken over the lease of the companies which run the Coventry Building Society Arena.
The sportswear tycoon’s retail group made a £17 million bid for the companies behind Coventry City Football Club's home ground.
The former Newcastle owner had been named as the preferred bidder.
The approval of administrators by a specialist judge in London on Thursday (17 November) was made despite a last-minute bid by businessman Doug King to delay court proceedings to allow for consideration of his potential rival offer of £25 million.
The court proceedings come the day after the Sky Blues’ owners Sisu Capital agreed to sell a majority 85% stake to Mr King in a deal, which would have left the club debt free.
The judge ruled that there was "not enough substance" in what his lawyer had said in court “to allay even the immediate fears over how this group can continue to trade”.
Doug King tells ITV News Central he would "love to have a chat" with Mike Ashley
Making the administration orders, Insolvency and Companies Court, Judge Sebastian Prentis said that the Frasers Group deal was the only “viable prospect” to prevent the group of companies “entering immediate insolvent liquidation”.
Simon Passfield, representing the operator companies, told the court on Thursday 17 November, they “cannot afford to trade beyond today”.
He added that there is around £1,200 jointly available in bank accounts and the companies potentially face a “black hole” of some £465,000 in payments due by the end of this week.
He said if the sale to Frasers Group could not be completed on Thursday then “there will be no available funds to allow the companies to continue to operate or engage in a further marketing process and, in consequence, it will be necessary for the companies to enter immediate compulsory liquidation”.
He warned in court liquidation would be “terminal” for the companies.
He said if administrators were not appointed then the council might forfeit the stadium lease and employees would be made redundant.
Doug King tries to delay companies entering administration
During Thursday’s hearing, Nigel Dougherty, representing Mr King and Coventry City owners Otium Entertainment Group Ltd, sought to delay the companies entering administration and secure funding talks between directors and Mr King.
He told the judge that Mr King purchasing the arena leasehold would provide a “long-term solution to the club home ground” and that his potential £25 million offer, subject to due diligence, was “much higher” than the Fraser Group deal and presented a “potentially significant higher return for creditors”.
He said the offer was not “illusory”, was made “on the basis of funding that is available and could be put in place to consummate that deal” and that discussions over interim funding could “remove the spectre that the companies are heading to a crunch point”.
Mr Dougherty also said Mr King indicated “his willingness to extend financial support to the operation of the arena” such as employees’ wage bill in order to allow for the consideration of his offer.
Speaking to ITV Central's sports correspondent Dan Salisbury-Jones, Mr King said: "I tried to make sure that the club and the stadium were together in this unique moment of getting that over the line. We failed at this moment but it's still an intention that I have."
The court heard that as of July 2021, ACL had net liabilities of £27.174 million, AC06 had net liabilities of £30.557 million and IEC had net liabilities of £5.54 million.
Available assets after payments made on Thursday were a little over £1,000, with payments due in the near future of £124,000 for energy, £127,000 over VAT and £50,000 for PAYE, the court was told.
Trust are 'cautiously optimistic'
A spokesperson from Sky Blue Trust has told ITV Central: "The Trust are cautiously optimistic over the takeover of the club, which will clear the club’s debts if approved.
"The reason for the cautious optimism is that this deal has come from nowhere and we don't know much about Mr King or of his background.
"With the other news today that the arena has been sold to Mike Ashley. We are pleased that the stadium has been saved and for those people whose jobs and lives have been affected in particular.
"We hope Mr Ashley and Mr King can work together to create an atmosphere where the club and stadium owner can work together for mutual benefit".