LOFT meeting to decide Regeneration Fund options
At our AGM in December, we pledged to procure legal advice and hold a Special General Meeting (SGM) by the end of March, in order to offer members the choice of how to move forward with the fund (based on that advice).
We're pleased to report that the legal advice has recently been received, therefore we have arranged an SGM to be held on Thursday 29 March at the Leyton Orient Supporters Club. A formal SGM notice has been sent to all current members.
The Supporters Club doors (and bar!) will open at 6:45pm for a 7:30pm start. The meeting will end no later than 10pm, for those making the trip to Guiseley the next day. We also plan to at least stream the meeting via Facebook and live tweet it.
To summarise the legal advice received:
The key question that was asked of Counsel was the basis on which LOFT holds the funds, and whether it holds it on trust. Counsel's opinion runs to 13 pages and goes into quite extensive detail around the setting up of the Regeneration Fund and LOFT's legal obligations around it. Handily, our instructing solicitors have summarised counsel's opinion as follows:
"In Counsel’s opinion:
- LOFT does not (subject to one possible caveat) hold the Regeneration Fund on trust – please see the caveat below;
- LOFT is entitled to retain the Regeneration Fund to use in one of the "disaster recovery" scenarios in future;
- However - each year before the LOFT AGM, the Board of LOFT must consider whether the Regeneration Fund is likely to be needed soon for one or more of the "disaster recovery" scenarios. In fact, the Board of LOFT can consider this issue at any time – it does not have to wait until the next AGM.
- If the Board of LOFT considers that the Regeneration Fund is not likely to be needed soon for one or more of the "disaster recovery" scenarios, then:
a. LOFT must offer refunds to those donors who donated £100 or more and standing orders of £20 per month or more. Such donors must be refunded, if they want one.
b. After LOFT has (i) offered a refund to all donors who donated £100 or more and standing orders of £20 per month or more and (ii) refunded those donors who come forward and request one, LOFT would be entitled to re-purpose any remaining monies in the Regeneration Fund for another purpose(s) by passing a resolution in accordance with its Rules.
- If the Board of LOFT considers that the Regeneration Fund is likely to be needed soon for one or more of the "disaster recovery" scenarios, then:
a. LOFT can hold on to the Regeneration Fund in order to apply it for that purpose – no refunds have to be offered.
b. If, despite its opinion that one or more of the "disaster recovery" scenarios is likely to happen soon, LOFT wants to re-purpose the Fund it would need to first offer refunds to all those donors who donated £100 or more and standing orders of £20 per month or more and pay out any such requested refunds, before it could proceed to pass a resolution to re-purpose the remaining Fund.
- The Regeneration Fund cannot be applied to increase LOFT's existing shareholding in Leyton Orient Football Club (though, as set out in bullet 3 above, LOFT's members could agree to re-purpose the Regeneration Fund for this purpose if they so wish).
"Caveat to item#1, above: In Counsel's view, it is possible that there are three different categories of donors: (a) those that donated on the basis and in the knowledge of the amended proposal; (b) those that donated without knowledge of the amended proposal, but only of the "disaster recovery" scenarios; and (c) those that donated via a collection bucket. While Counsel does not consider that a trust has arisen or can arise in respect of the donors in categories (a) and (c), he considers it is at least arguable that a trust has arisen in respect of any donors in category (b) (which is likely to be a very narrow category of people)."
In respect of the above caveat, Counsel’s opinion states that any claim would be stymied if it could be shown that someone donating was given the means to finding out about the amended proposal (i.e. to offer refunds on 'larger' donations) – and this was indeed the case, since all communications about the fund and the fund web page itself (and the GoFundMe campaign web page) stated the amended terms regarding refunds.
So, what does this mean?
LOFT's Board met shortly after receiving Counsel's opinion, and in accordance with that opinion has concluded that the Regeneration Fund is not likely to be needed soon for one or more of the "disaster recovery" scenarios – there is clearly no prospect at this time of either an insolvency event at the club or the club being put up for sale.
Therefore, LOFT must offer refunds to those donors who gave £100 or more, or £20+ a month by standing order.
What we are asking the SGM to approve therefore is not whether we should offer refunds, as we have no choice in the matter. Rather, what we are seeking members' approval on are the following terms which the Board has agreed:
- That LOFT's Board will make best endeavours to contact everyone whose donation falls within the refund category
- That the refund offer period should be time-limited to around six months, and that after the deadline all funds remaining in the Regeneration Fund are 'locked in' and no further refunds can be made
- That those with the right to a refund should be given three options:
- A full refund of the net amount after any PayPal/GoFundMe charges
- To leave their donation in the Regeneration Fund
- To give their refund to LOFT for its general funds, so that LOFT's Board can spend it on football community purposes
The last point is something we particularly would like to discuss at the meeting, as there are many opinions as to whether any of the fund should be spent on community projects related to Leyton Orient, or indeed to support other fans' groups facing club crises (in the same way that we received donations from other Trusts). As such, we have not committed to the final precise wording of the resolution to be voted on, until we hear members' views in advance and at the meeting.
What we are not proposing to seek a resolution on is to change the purpose of the Regeneration Fund (i.e. the funds that remain after refunds have been processed). The LOFT Board felt that it was not appropriate to do that so soon into a new club ownership, particularly given that the club has faced many financial crises throughout its history.