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HMRC v Portsmouth City Football Club Ltd

Validity of company voluntary arrangement

In HMRC v Portsmouth City Football Club Ltd (Ch D – 5 August) a football club suffered financial difficulties and entered a company voluntary arrangement. HMRC applied for the arrangement to be set aside contending that the rules of the Premier League and the Football League contravened the general principles of insolvency law by unfairly giving preferential treatment to ‘football creditors’. The Ch D dismissed the application. Mann J observed that if the voluntary arrangement were set aside ‘the club would not have the means to trade into the new season’ and there would be ‘a very sizeable risk if not a virtual inevitability that the club will be expelled and forced into liquidation’. If that happened the club ‘would cease trading and would be likely to fall out of the leagues altogether. 

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