At the recent Owners’ and Executives’ Conference and AGM, a number of new rules were decided regarding the insolvency process and football clubs.
The League’s Insolvency Policy has been changed to include the following:
- Football clubs are no longer required to enter a company voluntary arrangement (CVA)
- 12 points deduction for a club going into administration (up from 10 points)
- Continuing to support the Football Creditors Rule whereby football debt is paid before any other creditor (like HMRC).
- Administrators must have 21 days at least to market a football club that’s in administration, and meet the club’s supporters’ trust to allow them to put forward a bid.
- Buyers of football clubs (in administration) must pay back creditors a minimum of 35p in the pound over three years (or 25p if transferred by shares). If this isn’t followed, there will be a 15 point deduction the next season.
- If an individual buys a club with 10% shareholding or more, he/she must inform the Football League.
The League wants to focus on strengthening their insolvency policy to make it fair to employees, supporters and creditors.
A possible downside to the 21 days rule could be the club is on the market for a considerable amount of time. This could cause the business to lose value over time if suppliers and customers lose faith.