Stricken Swiss football side Neuchâtel Xamax has slipped into near-oblivion, with its Chechen owner arrested just hours after declaring the club bankrupt.
Bulat Chagaev was detained by authorities in Geneva, who had been investigating him for suspected fraud, for "financial mismanagement".
Hours earlier, Xamax said they would file for bankruptcy, then were formally declared bankrupt by a court in canton Neuchâtel. The two-time Swiss champion will drop out of the Swiss Super League midseason.
Xamax's season of turmoil on and off the field entered a terminal phase last week when the Swiss League revoked their license because of suspected fraud and a failure to prove they could meet its financial obligations.Their debts are estimated to be at least SFr8 million ($8.7 million).
Chagaev's arrest was requested by prosecutors in Geneva, where his trading company has an office. "His provisional arrest was ordered after a hearing held this afternoon. Another hearing is already scheduled for [Friday]," the Geneva authorities said in a statement.
Shortly before Chagaev’s arrest, his lawyer Jacques Barillon said in a statement that his client’s only aim had been to make the club prosper and not to draw any personal benefit from his ownership of the club.
Xamax's vice-president, Islam Satujev, also spent the night under arrest.
Xamax accepted their increasingly inevitable demise in a brief statement on the club website.
"The board of directors of Neuchatel Xamax has decided today to file for bankruptcy, because of the withdrawal of its license and the financial position of the company," the statement said. "The board also decided to immediately release the players from their obligations to the business."
The club had launched an appeal on Monday to regain its license to play matches, claiming that the league's disciplinary commission acted beyond its powers. Xamax's prospects dimmed on Wednesday when they failed in two attempts to receive court injunctions against the league.
The first team’s players and staff had not received their salaries since October, and the club had not paid taxes it owed or rent for the stadium it uses for its home games in Neuchâtel.
Xamax were scheduled to face a bankruptcy hearing on Friday, forced by a creditor who also tried in November to bring the club down.
It was at that hearing that Chagaev's legal team submitted an alleged fraudulent Bank of America letter which purported to prove he had $35 million in a New York account.
Prosecutors in Neuchâtel and Geneva are investigating the suspected fraud.
Only nine teams
Xamax were scheduled to resume their league programme after the winter break on Saturday February 4 at home against Lausanne-Sports.
They were fourth in the ten-team top division though were likely to drop to ninth after points deductions imposed by the league for failing to pay salaries and breaking administrative rules.
Xamax coach Victor Munoz and a reduced squad of players returned this week from a training camp in Dubai unsure about their futures. Munoz, a former Barcelona and Spain midfielder, previously coached Chechen club Terek Grozny, which plays in Russia's top division.
Terek Grozny's chairman is Ramzan Kadyrov, a football fanatic and president of the Chechen republic. Chagaev formally took control of Xamax last May, and arrived claiming that Kadyrov was "like a brother" to him.
However, Chagaev was reported to have fallen out of favour with Kadyrov, apparently because he failed provide promised cash according to information published on the Terek website in August.
Around the same time, Xamax were already descending into turmoil with a succession of sporting directors, coaches and players fired.
Xamax is the first Swiss top-tier club to drop out midseason since Geneva’s Servette collapsed with debts in 2005. Eight years ago, Lausanne was also declared bankrupt.
Both teams have since made their way back into the top division after being dropped into regional leagues.