tag:blogger.com,1999:blog-6391476958230949091.post8097874439315157960..comments2023-11-23T09:33:35.025+00:00Comments on Bankruptcy, Insolvency and Corporate Rescue: What is the Football Creditor Rule?Dr. John Tribe, Senior Lecturer in Law, University of Liverpoolhttp://www.blogger.com/profile/01467980377830600284noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6391476958230949091.post-57797572324804316772010-07-09T13:15:03.839+01:002010-07-09T13:15:03.839+01:00I have just had a conversation with someone who wa...I have just had a conversation with someone who was looking at the opposite view in that the income wasn't the asset of the club. This raises quite different problems.<br /><br />If there is a rule that states that the income belongs to the club but on insolvency it is payable elsewhere then this is a classic forfeiture clause that has been tested time and again, especially in the field of pensions. In short, it is very difficult to forfeit your own assets on insolvency but a third party can impose a forfeiture in terms that you only have a right to an asset whilst you are not insolvent. See Scientific Investment Plan 1999. <br /><br />I think the League might suffer some real difficulty in running this argument without causing colateral damage to itself. It's all very well constructing a contract that says that certain monies are not payable to an insolvent club, but it is quite another to then expect the club to perform its duties and effectively earn that money only to see the fruits of that work paid away by the Board under its discretion. In bankruptcy that is the equivalent of a bankrupt working for free and the spouse receiving a high wage and this would be overturned as a sham. The League could end up in a position whereby the only way to protect their Rule is to fully suspend the club and to remove it from fixtures.Stephen Hunt, Partner at Griffins Insolvency Litigation Forensicshttps://www.blogger.com/profile/18179596172782986163noreply@blogger.comtag:blogger.com,1999:blog-6391476958230949091.post-86632659292405449422010-07-09T12:32:11.846+01:002010-07-09T12:32:11.846+01:00To put it in practical terms, when I am constructi...To put it in practical terms, when I am constructing a Statement of Affairs for a company, where does the Football Creditor sit? <br /><br />The FCR does not forfeit the asset so the money due from the TV rights etc must appear as an asset at the beginning of the document. Either the football creditors are then shown as a deduction as some form of charge, or the assets are avalailable to other creditors and the football creditors rank as unsecured. It cannot be any other way can it?Stephen Hunt, Partner at Griffins Insolvency Litigation Forensicshttps://www.blogger.com/profile/18179596172782986163noreply@blogger.comtag:blogger.com,1999:blog-6391476958230949091.post-63467834666687349472010-07-08T15:51:56.210+01:002010-07-08T15:51:56.210+01:00I have made a small amendment but C50-58 doesn'...I have made a small amendment but C50-58 doesn't seem to affect my point. <br /><br />I am trying to find a category to fit the FCR into before deciding how it should be treated in a formal insolvency. Whether security or a trust, I can't get away from the fact that it confers a right to a creditor over the assets of the club and as such it should be treated as a form of security for voting and dividend purposes.Stephen Hunt, Partner at Griffins Insolvency Litigation Forensicshttps://www.blogger.com/profile/18179596172782986163noreply@blogger.comtag:blogger.com,1999:blog-6391476958230949091.post-91612413132197882202010-07-08T12:50:16.935+01:002010-07-08T12:50:16.935+01:00You need to look at Rule C50 et seq where it is sp...You need to look at Rule C50 et seq where it is spelled out in terms of insolvency C58 in particularAnonymousnoreply@blogger.com