BusinessCompany NewsPremier League defends preferential insolvency rule

Premier League defends preferential insolvency rule

The Premier League gave its side of the story yesterday over preferential payments to football creditors in football administrations

The Premier League defended its preferential payments rule in an insolvency
at a Business Finance and Accountancy (BFA) parliament group meeting.

Bill Bush, director of communications and public policy at the Premier
League, defended the football creditor rule (FCR) at the briefing yesterday,
claiming smaller clubs would suffer if it was taken away. He reminded attendees
that HMRC has previously challenged the rule in court and lost.

The football creditor rule enables football creditors, such as players and
other clubs, to receive payment in full ahead of preferential and unsecured
creditors in the event of a club entering insolvency.

Bush said it would be “interesting” to see what happens at Portsmouth – where
HMRC has legally challenged a company voluntary arrangement (CVA) deal proposed
by administrators from UHY Hacker Young. The taxman said it was “unfairly
predjudiced” in the voting process of the CVA.

One attendee at yesterday’s briefing labeled the rule “disgraceful”, while
another claimed no other business would be able to “get away” with such a rule.

The BFA group concluded that if football wants to “justify” its preferential
rules, it must give back to society.

The event was chaired by Iain Wright, MP for Hartlepool, who opened the
discussions highlighting high debt levels, tax payment problems and financial
sustainability problems in the football sector.

Deloitte’s director in the sports and business group, Paul Rawnsley, said
despite concerns of financial stability from football clubs, the industry
increased revenues by 15% in the last season.

Deloitte was working with the UEFA on bringing financial stability to
European clubs, he added.

The ICAEW is the secretariat for the BFA.

Further reading:

HMRC
tackles Premier League football creditor rule

Budget
2010: HMRC’s new powers will hit football clubs

HMRC
fights for full voting rights at Portsmouth

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