£3.7m Burnley FC loan is ‘top Modus asset’
A DEBT owed by Burnley Football Club to Brendan Flood’s collapsed property group Modus Ventures is one of the firm’s most valuable assets.
A creditors’ report into the future of the Salford-based group shows that Modus loaned Burnley £3.7m that was due for repayment when the club won promotion to the Premiership – a feat it achieved in May.
The cash is expected to be paid back on August 5 after Burnley receives its Premier League funds, although the administrators said the club’s solicitors dispute an “element of the debt”.
Mr Flood, Modus’ managing director, has a close association with Burnley after joining its board in 2006 and going on to make significant financial contributions.
While Modus’ main business was property, administrators from the accountancy firm KPMG said a return from its investments was “uncertain” because of falling prices and “significant liabilities”.
A schedule of assets and liabilities in the report shows that Modus is expected to realise just £5m of the £48.5m it is owed by related companies established to handle specific developments.
The company’s biggest creditor is the Bank of Scotland which is owed £23.6m. Unsecured creditors are not expected to receive a return.
The administrators said Modus suffered as a result of the deteriorating economic conditions in 2008-09, particularly the drop in property prices and the lack of funding following the banking crisis.
According to the report the company was in talks with existing investors and a third party, understood to be the property developer CIREF, over extra funding when HM Revenue and Customs issued a winding up petition. The Bank of Scotland subsequently sought an administration appointment.
Modus Ventures, which went into administration in May, was the non-trading holding company of the Modus Group. It controlled a group of 40 companies, around 20 of which are now also in administration, and its interests spanned property development, fund management, private equity and management companies.
