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12 Oct 2011
DESPITE SYMPATHY FOR creditors that lose out due to controversial football insolvency rules, the government has stopped short of pledging to intervene.
The report from the Department for Culture, Media and Sport responding to an inquiry into football governance, said that the profession should be able to find a solution to its concerns over the insolvency rule.
The football creditor rule sees players, other clubs and manager to the front of the queue in terms of payment when a club enters insolvency. Other creditors, including the taxman, are paid with what is left in the pot after the so-called ‘super-creditors'.
"We have sympathy for those who described the consequences of the rule as ‘morally indefensible'. We understand and acknowledge the strong desire of the football authorities to protect the integrity of their competitions," stated the report.
"At the same time, it should not be beyond the skill and financial resources of the professional game to find a solution that protects the integrity of the competition, incentivises financial prudence and due diligence, and offers equal protection to all unsecured creditors in any future insolvency event."
The department said that despite an ongoing legal battle over the issue between HMRC and the football leagues, it would work with the football authorities to find an "appropriate and modern solution to this issue".
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An unacceptable preference
The rule merely encourages clubs to be irresponsible. Legislation is essential to stop this abuse of second class creditors, including HMRC i.e.the taxpayer.
Posted by: Roger Newnes-Smith, 13 Oct 2011 | 10:50
Football Insolvency
I wonder how many personal liability notices been served by the taxman/HMRC on controlling directors of failed football clubs? This also leads to the question about the taxman, as a "second class creditor" having powers no other unsecured creditors have.
Posted by: Chris Leslie, 20 Oct 2011 | 09:25