Updated rules for insolvent football clubs

The Football League has recently amended the regulations that apply to insolvent football clubs, to come into effect from 8 August, the start of the next football season.

A core asset of a company that trades as a football club is the club’s share in the Football League. It is the Football League who set out the consequences if a company owning a club goes into administration, and the conditions under which they will allow the transfer of a League shares from an insolvent company to a purchaser.

The regulations have been revised to provide that:

  • A football club owned by a company that enters administration will have 12 points deducted (previously this was a 10 point deduction).
  • The administrator of an insolvent football club must market the club’s business for sale for at least 21 days. During this period, the administrator must meet the club’s supporters’ trust and allow them the opportunity to bid for the club’s business and assets.
  • The Football League will impose a further 15 point deduction unless any purchaser of the club’s business and assets agrees to pay unsecured creditors either:
  • A minimum of 25 pence in the pound immediately upon the transfer of the League's share to the purchaser, or
  • A minimum of 35 pence in the pound within three years of the transfer to the purchaser of the League’s share.

These revised regulations no longer require an insolvent football club to exit administration via a company voluntary arrangement. They do preserve the ‘football creditor rule’ which makes the transfer of a League share from an insolvent club to a purchaser conditional on the purchaser repaying in full all debts due to other football clubs and players.

For information and advice relating to any aspect of insolvency, please contact us on 0115 9888 777.

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