HMRC v The Football League Ltd and The Football Association Premier League Ltd

The High Court yesterday gave judgment in a case concerning the much debated “football creditor rule” operated by The Football League (the effect of which is that, should a football club become insolvent, the claims of its players and other football clubs have priority over the claims of the insolvent club’s other creditors).

The decision means that a contractual provision, such as an intercreditor agreement or a deed of priorities under which the rights of an insolvent company are varied, would not breach the pari passu principle (sometimes known as the rule in British Eagle) where the relevant provision took effect on administration, but before the administrators gave notice of their intention to distribute a dividend (which, if relevant, normally occurs some time after the administration is commenced).

The High Court also considered the application of the anti-deprivation rule. For more on the decision and its commercial significance, please click here.

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