Red Card Global – the Singaporean firm that was announced as new owners of A Lyga club FK Riteriai – have officially withdrawn from their acquisition of the club. LFF offered €50,000.00 in bailout funds.
On Saturday, we reported that FK Riteriai were in danger of insolvency as resignation of sports director Vytautas Masaitis and emerging evidence of financial mismanagement put a halt to planned injections of capital from Red Card Global – the company that was said to have acquired the club before the start of this season.
Today, sportas.lt reported that the Lithuanian Football Federation (LFF) has agreed to issue the club with EUR 50,000.00 in bridging money in order to avoid Riteriai going bankrupt and having to withdraw from A Lyga. The president of the LFF, Edgaras Stankevičius, commented on the ongoing situation:
In the middle of last week, a search was announced for who could take over this club, what is the situation with contractual matters. One thing is the legal basis – the club has been sold, the obligations from the Singapore side are not being fulfilled and yes, they have complaints against the former owners, which is why that contract is not being implemented, but if you look at it “de facto”, the contract was signed and the club has not received that money. The club has received one advance payment – EUR 150,000.00 of the committed EUR 500,000.00 that are required as minimum budget [for the A Lyga license].
He went on to explain that the LFF is committing EUR 50,000.00 of their own funds to Riteriai in full knowledge that they might not get these funds back:
My idea and plan is that a payment of 50 thousand euros will be given to the Riteriai club today, in order to stabilize the situation in the club. Players and coaches will receive minimal injections so that the process can take place, because today there was talk of a boycott. We really do not want this and we really do not want the league to have nine teams instead of ten. I will do everything that is in my power to maintain 10 clubs. The first step is a 50 thousand injection, with the possibility of bringing Riteriai back. We know that they may not return and we know that risk, but this is necessary for the sake of Lithuanian football and so that the league can have 10 clubs.
Later in the day, Red Card Global issues a press release to clarify their perspective. It mentioned that:
- during acquisition negotiations, FK Riteriai was presented to Red Card Global as a debt-free club and the acquisition decision relied heavily on this being true, which the Singaporean company is no longer confident is the case;
- as we reported, and contrary to the statement issued by the club, all EUR 150,000.00 have been sent to the club, with EUR 50,000.00 (the shortfall that is now to be secured by the LFF) going to Lit-Invest as part of the purchase agreement;
- a portion of the remaining EUR 100,000.00 transferred for operating expenses was instead used to settle old debts without prior approval;
- despite the EUR 50,000.00 being paid to Lit-Invest for their shares of Riteriai, Red Card Global were not officially registered as club owners, with the three owners in the Lithuanian public company register still remaining Lit-Invest, Ecoil and Zetus;
- contrary to what we reported and to the information at our disposal, all salaries for February had, indeed, been paid;
- a senior club official resigned due to internal disagreements about examples of aforementioned conduct.
The press release further explained that an independent local auditor contracted by Red Card Global uncovered ‘substantial negative equity’ not disclosed during acquisition negotiations. As a result of these findings, the Singaporean firm decided to cut their losses and withdraw from Riteriai as well as to launch legal action against the sellers of the club for “misrepresentation, breach of agreement, and the unauthorized use of funds committed in good faith“.