Lehman administrators lose insolvency case

ADMINISTRATORS for Lehman Brothers have lost a landmark insolvency case, which could have ramifications for HMRC's suit against the Premier League.

The Supreme Court ruled that a consortium of investors should be paid ahead of other Lehman creditors, as stipulated in its contract prior to the bank's collapse.

The administrators of the US arm were battling against the consortium, Belmont Park Investments, because the contract entitled it to super-creditor status, ensuring that members are paid ahead of all other creditors. The administrators believed this was against insolvency law because it did not treat all creditors fairly.

HMRC is fighting against the Premier League and Football League over a similar issue, with the Lehman result likely to affect its future success.

The taxman is battling to have the football creditor rule overturned because it believes such prioritising of payments to players, managers and clubs over other creditors in the event of a club entering administration is "unlawful".

Update:

A spokesman from the taxman said: "HMRC intervened in the Belmont appeal in order to inform the Supreme Court of the issues arising in its case against the Football Association Premier League concerning the so called Football Creditors Rule.

"In its judgment the Supreme Court was careful not to pre-judge any of the issues in the case between HMRC and the Premier League which did not arise for decision in the Belmont appeal. The purpose of HMRC's intervention in this case was therefore achieved."