Lehmans halts Premier League court battle

HMRC AND THE FOOTBALL ASSOCIATION Premier League's (FAPL) court battle over insolvency rules has been postponed in order to await the decision in a separate insolvency hearing involving Lehman Brothers Special Financing.

Both the taxman and FAPL were expected to put forward their arguments over the controversial football creditors rule to the High Court yesterday, with a trial date expected to be set shortly after.

HMRC is battling to have the football creditor rule overturned as it believes the rule - which prioritises the payment of players, managers and clubs in the event of a club entering administration - is "unlawful".

A spokesman for HMRC said: "The hearing originally expected this week has been adjourned by agreement of the parties pending the decision of the Supreme Court in the case of Lehman Brothers Special Financing Inc -v- Belmont Park Investments PTY Ltd and others, and to enable the parties to consider whether there is anything in that decision which affects their position."

HMRC is basing its FAPL court battle on two legal arguments. It believes the Lehman Brothers action will touch on one of the arguments against the Football Association, and is awaiting judgment before continuing.

The taxman's case is based on both the pari passu rule which means creditors should be treated equally and without preference as they are in other insolvency cases; and the second is based on restrictive practices which force football clubs in the FAPL to abide by its insolvency rules - which HMRC deem unlawful.

The taxman filed papers to the Royal Courts of Justice on 18 May labelling the football creditors rule as "unlawful" because it believes the rule is outside the laws of insolvency.

One example that angered HMRC was in the Portsmouth FC administration, where the taxman is likely to be paid just one-fifth of an estimated £37m it is owed.