Sick as a parrot

The defendant company Football League Ltd was limited by shares. Under the football creditor rule in the event of a member club becoming insolvent certain creditors such as other clubs were paid in priority of other creditors.

HMRC challenged the rule saying it caused the department loss. The Revenue suggested the football creditor rule contravened fundamental principles of insolvency law.

The High Court said most circumstances in which the Football League’s insolvency policy operated would not be rendered void by the anti-deprivation rule or pari passu principle. In any event this could be tested only in a real case.

The court decided not to make the declarations requested by HMRC.

The Revenue expressed disappointment with the judgment and is considering an appeal. The department continue to believe that ‘the football creditor rule is unfair to all other unsecured creditors who are forced...