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Administration: What is it?

Administration: What is it?


Lee Power has suggested the club could go into administration.  Administration is an insolvency process by which a company is placed under the control of a qualified and licenced insolvency practitioner (typically a professional accountant or lawyer).  Normally, the directors could put the club in administration if it is unable to pay its debts, but they are currently prevented from doing so by a Court injunction. 

If the club is put in administration the administrator is in charge of everything except coaching the squad and picking the team.  The objective is to find a way to rescue the company, so that it can continue trading.  However, if that is impossible, the administrator may sell assets to pay creditors (i.e. the individuals and companies owed by the monies as a club) and the club could go into liquidation.   That should not be a risk given the number of people interested in buying the club, but administration is a perilous state for any club to be in, and is particularly dangerous for Swindon given the amount of debt apparently owed to Lee Power and his entities, the Court proceedings about whether Michael Standing owns 50% of the club and the charges against the club, Lee Power and Michael Standing for alleged breaches of the FA’s Regulations on intermediaries.

The club will be protected from legal proceedings during the administration (but this will not affect the proceedings between Lee Power and Michael Standing).

In using those powers, an administrator must act in good faith, fairly and honourably. He or she must be independent and impartial in the management of the company and its assets and seek to rescue the company as quickly as possible.  TrustSTFC will do what it can to monitor compliance with these duties.

However, an administrators’ duties are aimed at the interests of the creditors. From the perspective of the fans this is a significant weakness in the process.  The administrator has no obligation to consider the desires of the supporters or the fact that a football club is a community asset.  The position is made more difficult by the fact that many of the debts of the club are owed to Lee Power or his companies.  

If the club enters administration, it will be given a 10-point penalty. Debts to other clubs and players must be paid in full before the club can continue playing in the football league.   The administrators’ fees will be paid from the assets of the club.

TrustSTFC believes it is the best interests of everyone for Lee Power to now sell the club to Clem Morfuni.


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