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A tangled legal web at Rochdale

Morton House MGT and First Form Construction Limited, the company that tried and failed to take control of Rochdale last summer, has begun legal action against the club, its directors and — most remarkably — its supporters.

Dale Trust, the fans’ group with a membership totalling 1, 300, believes it is now the subject of litigation never seen before in English football. A shareholder is effectively taking a section of the club’s supporters to the High Court.

Where this legal wrangle leads is unclear but Rochdale’s togetherness is facing a prolonged test. They had hoped an external threat to harmony had been banished back in August when Morton House told the EFL of plans to divest its shareholding, but the legal petition issued two days before Christmas has demanded further unity.

A six-figure sum would be needed to cover legal costs if this case goes all the way to the High Court and crowdfunding has already raised close to £34,000. Donations big and small have come from nearly 700 people.

Matt Southall,formerly controversially associated with Charlton Athletic, is formally working as an advisor to the firm that agreed to buy a 42.3 per cent shareholding last summer.

“Morton House did not want it to get to this point,” he says. “It tried on numerous occasions to come to an agreement but ultimately, if you invest £1.2 million in a company, you’re within your rights to protect that investment. It’s now down to the respondents to plead against the case.”

A search for outside investment came to nothing last spring but, by summer, on to the scene came Morton House, then fronted by Andy Curran and Darrel Rose, hoovering up the shareholdings of six individuals and groups that ran to approximately 220,000 shares.

They had hoped to reach a majority — thus taking control — but attempts to buy the key shares owned by director Andrew Kelly came to nothing. They were instead sold to the Dale Trust, which became the second-largest shareholder. The late super-fan David Clough, whose statue sits in the main stand, helped fund the purchase after leaving his estate to the club when dying in 2020.

Morton House argues it was not given the opportunity to purchase shares to increase its own holding in Rochdale when there was a share issue in November.  The new share issue has seen their 42.3 per cent stake fall to 23 per cent.

Morton House, in short, believes Rochdale acted unlawfully against a shareholder and that Dale Trust was able to benefit by purchasing 85,000 newly allotted shares in November. They are points that the club’s board and Dale Trust “strenuously deny”.

“It’s a petition against unfair prejudice,” explains Southall, who says he began advising Morton House in the autumn and would be willing to buy a 25 per cent stake of the company.

“Just because they’re the supporters trust, can’t they face the consequences of unlawful action? That’s not a good precedent for the rest of the football industry. They benefited from the unlawful actions of the directors, which is why they’re involved in proceedings.”

Now it is Southall front and centre and his history is doing little to calm fans. Southall was chief executive at Charlton during one of the club’s most turbulent spells and left under a cloud. By the summer of 2020 he was ordered to pay £21,000 costs after admitting to unlawfully changing the status of directors at the club’s parent company, East Street Investments.

Southall is deeply unpopular in south London, a fact borne out by the number of donations to Rochdale’s crowd-funding page from Charlton supporters. There is, though, an interest in returning to football’s front line.

“It is like a drug,” says Southall. “I feel like I’ve got a point to prove after my time at Charlton. I want to show I was wronged.”

Southall says the EFL have told him there would be nothing to prevent him becoming a relevant person and that he attempted to buy 125,000 shares at Rochdale’s share issue in November.

 

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