14.B General Insolvency
14.B.1 In the event of a Club entering an Insolvency Event between the end of the AGM and start of the AGM immediately following thereafter (‘the next AGM’) then it shall automatically be relegated by one Step at the next AGM, unless one of the following requirements has been met, namely:
- (i) Prior to the next AGM it has Paid in Full all its creditors (including but not limited to Football Creditors); or
- (ii) Prior to the next AGM it has Paid in Full its Football Creditors and entered a compliant CVA.
For the purposes of this Rule, a CVA shall be considered compliant if it provides for the following:
- That all Creditors will be paid in Full;
- The first payment under the terms of the CVA shall be made within 28 days of the approval of the CVA and shall constitute a minimum of 10% of the total sum payable;
- The balance shall be paid in equal amounts over the remaining period of the CVA;
- The period of the CVA shall not extend beyond three years from the date of approval.
Notwithstanding the above, in the event of a Club being subject to an Insolvency Event at the date of the AGM, then the Club may be subject to such sanction as the Board may determine, (including expulsion from membership of the Competition) unless the Board is satisfied that by no later than 5pm on 31 July (or, if the 31 July falls on a weekend, 5pm on the immediately preceding Business Day) that the Club (or any new entity to which its membership is subsequently transferred under 2.9.2 above) is in a financial position to complete all of its fixtures for the immediate following Playing Season.
This sanction shall apply in addition to any Club being relegated pursuant to its playing record in the same period namely that in the event of the Club having already been relegated by one Step it shall be relegated two Steps.
This provision is subject to Rule 2.9.1 in respect of Clubs which have transferred their membership pursuant to an Insolvency Event and in that case where there is any conflict between any provision of Clause 14 and Rule 2.9.1 then this Clause 14 shall prevail.
14.B.2 A Club shall not be eligible for promotion or to compete in the Play Offs at the end of a Playing Season if at 5pm on the date on which the last scheduled League fixture is due to be played that Club:
- (i) has entered an Insolvency Event between the date of the AGM and 5pm on the date on which the last scheduled League fixture is played and has not Paid in Full all its creditors to which the Insolvency Event applies (including but not limited to Football Creditors) or Paid in Full all its Football Creditors and entered a CVA to have Paid in Full all other creditors over an agreed period not extending more than three years following the date of approval of the CVA: or
- (ii) has not complied with the terms of a CVA by which it is bound or is to seek to extend the period of the CVA.
14.B.3 The sanctions contained herein shall be in addition to and not in substitution for any other sanctions contained within the Rules and, in particular, the sanctions set out in rule 14.A. For the avoidance of doubt, where a Club is subject to more than one connected Insolvency Event, for example Administration followed by a Company Voluntary Arrangement, any sanction applied to it in accordance with Rule 14.B.1 shall be applied in one Playing Season only except as provided for in Rule 14.B.1
COMPLIANCE WITH/EXTENSION OF CVA’S
14.B.4 Any Club must inform the Competition in writing and provide supporting evidence within seven (7) days of the Club:
- (i) making a payment under the terms of a CVA and provide evidence of that payment;
- (ii) becoming aware of any failure to comply with the terms of any CVA entered into by it (including the failure to make a payment by the due date);
- (iii) making an application to extend or vary the terms of the CVA entered into by it and provide a copy of the application,
- (iv) completing all its obligations under an Insolvency Event and receiving confirmation of such from the relevant Insolvency Practitioner, or
- (v) becoming aware of any consent by creditors to compromise the whole or part of the debt admitted into the CVA.
14.B.5 Following the approval of a CVA, if creditors subsequently consent to compromise the whole or part of the debt admitted to the CVA or if any Club makes a successful application to vary the terms of its CVA so that the CVA is not compliant as provided for in Rule 14.B.1 then that Club shall be automatically relegated by one Step at the end of the Playing Season in which the event takes place. If the Club has already been relegated due to its position in the final table of the Division in which it is competing then it shall be relegated two Steps.
14.B.6 In the event of any Club
- (i) Failing to comply with the terms of any CVA entered into it (whether securing Payment in Full of all of its creditors or not) including the failure to make a payment by the due date;and/or
- (ii) Breaching any of the provisions of Rule 14.B.4 or failing to notify the Competition of any consent by creditors to compromise the whole or part of the debt admitted thereby rendering the CVA as non-compliant as required in Rule 14.B.1.
Then the Board shall have the power to impose such sanction as it deems appropriate, including, but without limitation to expulsion of that Club, the relegation of that Club, the deduction of points and an Embargo.
14.B.7 Where a Club has transferred its membership under Rule 2.9.2 the provisions of Rule 14.B in relation to a CVA shall be applied to the former entity that was subject to the Insolvency Event and/or the new entity.
14.B.8 In the event of any Club entering the Competition from the Football League whilst subject to any Insolvency Event, then that Club shall be eligible for membership of the Competition and the provisions of Clause 14.B.1 will not apply to it at the AGM at which it is first elected into membership but will apply in all seasons after its first season of membership of the Competition.
14.B.9 In the case of a Club or Clubs relegated from a league in the National League System (excluding Step 7) or subject to lateral movement under the National League System Regulations, Rule 14.B.1 shall apply from the date of the AGM of the League of which the Club or Clubs were a member in the immediately preceding Playing Season where the AGM of the Company is later.