Will Protected Status of Football Creditors End? - 30/05/2004

The protected status of football creditors under FA and Football League rules is being challenged in the High Court by the Inland Revenue in cases relating to Wimbledon and Exeter City (the Exeter case will be heard in July). The all-party parliamentary committee on football recommended abolition of the rule in a report this year. If it was abolished, there might be much less tolerance of clubs going into administration as a convenient reorganisation device with the St.John's Ambulance always ending up with nothing, along with local small businesses.

The plan for Wimbledon under a proposed company voluntary arrangement (CVA) envisages the Inland Revenue and other preferential creditors receiving 30p in the pound while football creditors, including players and other clubs, would have their debts paid in full by Wimbledons new owner, music producer Pete Winkelman who would have to find a total of £1.45m. The club has been in administration for nearly a year and will be expelled from the league if it is not out of administration by the end of July. Many football fans would say 'good riddance' to 'Franchise FC', supposedly to re-named the MK Dons. Fans' club AFC Wimbledon has been attracting gates of over 3,000 to matches well down the pyramid (it could take them ten years to get back into the League). Although Wimbledon are bottom of the first division attendance league with an average crowd of 4,750, this is more than many people though they would get. Admittedly, many of these are probably away fans. But, hey, if you live in Milton Keynes and are bored on a wet afternoon (and who wouldn't be?) why not go along to the National Hockey Stadium and soak in the artificial atmosphere.

Wimbledon win case
The threat to such arrangements was lifted when the High Court dismissed the taxman's challenge to the CVA. Mr Justice Lightman ruled in the original hearing, 'The power of the League to impose the obstacle and secure full payment for creditors of its choice may be objectionable ... but the obstacle exists [and] by common consent is legal.' The Lord Chief Justice, Lord Woolf, uphelf that decision.