Premier League Defends Controversial Rules

The Premier League has come out in defence of the controversial ‘football creditors rule’ whereby football creditors of insolvent clubs receive a super-preferential status when the club enters formal insolvency proceedings.

The ruling is seen as unfair by many in the insolvency industry and has come under constant criticism, in particularly from HMRC, who is currently preparing to fight the legality of the rule at court for the second time.

As part of the ongoing dispute, HMRC are currently fighting Portsmouth’s CVA proposal as they do their best to prevent any CVAs going through in football whilst the rule is still in place and football creditors are paid in full regardless.

The Premier League are arguing that the ruling protects smaller clubs from also falling into debt as they believe that keeping all the money possible in the game will keep things on an even keel.

HMRC meanwhile, have branded the rule ad ‘fundamentally unfair’ whilst others have labelled it ‘disgraceful.’

As things stand, football clubs are allowing each other ludicrous credit terms when dealing with player transfers between each other, and due to the football creditors rule, the selling club will be paid even if the buying club cannot continue with the payments and falls insolvent.  It’s seen as win, win for football clubs whilst others, including HMRC lose out.

Should the rule be wiped out, it would definitely lead to more caution when agreeing on such credit terms, many believe that by doing this, it may go a long way towards curbing the debt culture circling football at the moment.

HMRC are due in court 3 August 2010 to appeal Pompey’s CVA whilst a court date for when they will bid to end the ruling has yet to be announced.

Posted at 04:07PM Jul 30, 2010 by Marc Stenton in Insolvency  |  Comments[0]