Not many people shed a tear for the players when a football club goes into administration. Instead the press always quote how much money the St John’s Ambulance Service loses. The realities are in any football insolvency the creditors (including the players) lose out and the players involved are usually at the lower level clubs. 

Landlords often ask for a rent deposit when they grant a new lease, or consent to an assignment, especially if the incoming tenant is of shaky covenant strength. This provides security against possible future default.

If a tenant becomes insolvent then this is exactly the sort of situation where a landlord would want to make use of a deposit. Where it is in the “commingling” form (i.e. paid to the landlord so that it becomes a debt in favour of the tenant) then that is unproblematic: no restrictions are imposed by the moratorium which arises on the tenant’s insolvency.

In the case of B v IB [2013] EWHC 3755 (Fam) the High Court has determined the status of an application made under s.423 of the Insolvency Act 1986 issued during divorce proceedings where the husband had died during the process and the wife intended to commence new proceedings under s.10 of the Inheritance (Provision for Family and Dependants) Act 1975.

Background

Where an Administrator makes employees redundant ahead of a sale of the business, will it always be a dismissal connected with a transfer (and therefore automatically unfair), or can it ever be for "economic, technical or organisational" (ETO) reasons (and therefore potentially fair)? In Crystal Palace FC Ltd –v- Kavanagh & ors [2013] EWCA Civ 1410, the Court of Appeal found for the latter, a more pragmatic, approach. Motivation, it appears, is everything in such cases. 

Our government has a longstanding commitment to cutting red tape. One of the ways of doing this it seems is to propose an Act of Parliament running to 153 pages. Thus we are presented with the Deregulation Bill.

A few of the provisions of this Bill relate to insolvency. The most significant are:

Appeal Judges in the Court of Session yesterday issued a decision directing that the liquidators of Scottish Coal Company (SCC) cannot abandon sites or disclaim statutory licences imposing obligations on the company.

The applicants in Closegate Hotel Development (Durham) Limited & Anor v McLean & Ors [2013] EWHC 3237 (Ch) were companies that had borrowed money off Barclays Bank to finance a hotel venture.  That funding was secured by floating charges granted by the companies.

Not many people shed a tear for the players when a club goes into administration. But the realities are that the creditors lose out and that the players involved in the majority of cases are at the lower level clubs. Out of the 60+ club insolvencies we have been involved in, only one was in the Premier League.

Footballers’ salaries differ wildly. The PFA published a league table in The Mail on Sunday recently stating average weekly earnings for players were as follows:

The case held that a judge was right to strike out a claim brought by a liquidator under sections 238 and 241 of the Insolvency Act 1986, as the transactions alleged to have been made at an undervalue were not transactions entered into by the company.

Comment

The Administrators of a group of companies put their proposals before the creditors who failed to approve the proposals. Indeed, they failed to vote at all. The Administrators applied for the proposals to be approved by the Court. It was held that such approval was not required unless  the proposals were actively opposed by creditors. In the absence of such approval, the judge considered that the administrators have the power to act in their own discretion. The judge also used the case to comment on the standard form of proposals used by most insolvency practitioners.