The taxman had been planning to argue that the CVA was unlawful because football ‘super creditors’ – as defined by the football conference – were to be paid in full, reducing the money it could recoup. But it appears to have thought again in light of its defeat in the Wimbledon case.
Sue Bunning, of Clarke Willmott, solicitor for Exeter, said: ‘I was quite surprised to get the call because the cases were quite different on the facts. This may help insolvency practitioners who can probably arrange CVAs now without fear of a Revenue challenge.’
But she warned that the great ‘super creditor’ debate could rumble on. ‘The issue is not going to go away because there are a fair number of professionals unhappy about it – mainly insolvency practitioners,’ she said.
Bunning said she believed the Revenue might still challenge CVAs where the alternative was less bleak than had been the case with Wimbledon and Exeter. Both clubs faced almost certain oblivion in the wake of a successful Revenue action.
With the hurdle of the taxman’s legal assault on its CVA removed, Exeter can now secure its survival as long as it keeps up its repayments. Some £400,000 is due within the next year and a half.
Earlier this year the club itself withdrew a planned action, this time against the football conference for ‘unfairly prejudicial treatment’ including the imposition of the super creditor rule.
Stephen Allinson, insolvency partner at Clarke Willmott, said: ‘The effect of the Revenue’s withdrawal means that the ‘football creditors’ rule that was at the heart of this challenge by the Revenue remains in existence unless and until a successful action is taken in the future – but that will not now involve Exeter City.’
The Revenue said it could neither comment nor confirm it had dropped the case, citing ‘confidentiality’.
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