Last week, Accountancy Age revealed the Football League was being urged to drop the preferential creditor rule which obliges teams to gurantee the contracts of special ‘football creditors’ such as players, managers, and other clubs above traditional creditors like banks and the taxman.
The support comes as the footballing world shifted its attention from ailing clubs to the fortunes of the England team as it prepares for the World Cup.
Clubs back home continue their struggle to survive while being forced to pay high wages to players which they cannot renogotiate because of the ‘super creditor’ rule. Those handling insolvent clubs agree one of the biggest drins on the club’s finances are higher player salaries.
PKF’s Brian Jackson, administrator of Motherwell FC explained that England’s football league rules, which are different from Scottish rules, would have seriously hampered his chances of saving Motherwell football club.
He said: ‘I had to make nine players redundant, but I’d have had to liquidate the club which would mean making 30 players redundant and then nobody would get any money.’
Nick Wood, corporate recovery partner at Grant Thornton and a football administration veteran, said : ‘The super creditor status hampers negotiations in restructuring a club and negotiations with other creditors because there is no incentive for them to renegotiate the debt if they are right down at the end of scale.’
Matt Dunham, administrator for Bury FC, thinks is not possible, as players are now ‘trying to get as much money as they can out of their contracts for fear of losing their jobs.’
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children