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Monday, 21 October, 2002, 10:14 GMT 11:14 UK
Administration: How it works
Barnsley's Oakwell ground
Barnsley are currently in administration
BBC Sport Online examines what being placed in administration means for a football club.

What is administration?

It is a legal procedure that allows a business in financial trouble to keep operating without being forced to sell off assets to pay debts.

The aim is to give a company a breathing space in which it can restructure its finances and put its business on a sounder footing.

It is preferential to liquidation or receivership for a club in severe financial difficulties, because its legal purpose is "the survival of the company as a going concern".

Creditors will commonly favour a period of administration over a move directly to liquidation because there is a greater chance they will get all of their money back.

How does it happen?

A petition is made to a magistrates court by its creditors or, more often, its directors.

Before an administration order is granted, these parties must convince the court that the club is unable to pay its debts.

  Top clubs in danger of administration
Coventry City
Derby County
Sheffield Wednesday
Leicester City

There is no requirement to inform supporters or the media until the administrator himself wishes to go public.

The administrator, usually a named individual at an accountancy firm, is appointed by the court.

But as it is the company that applies to the court for the administration order, it is quite likely that the court appoints the company's choice.

What does the administrator do?

He or she takes on the role of running the business with the aim of getting the club's creditors as much money as possible while keeping the club alive.

He will make a series of proposals regarding the company's future - such as a sale of assets like players.

What can the fans do?

There is no legal requirement for an administrator to take any notice of supporters' wishes.

But on a practical level, many administrators prefer to bear in mind the feelings of the fans.

In cases where fans have formed a single pressure group the administrator has often met with them to discuss his proposals.

How does a club start on the road to recovery?

When the objectives of the administrator have been met - satisfying the creditors and insisting on certain business practices - he will apply to the court for his release.

A Creditors Voluntary Agreement can also be used to get a club out of administration.

This is a debt restructuring proposal from the club to its creditors, a private agreement to pay off some of the money owed at a certain, mutually satisfactory, level.

The club should then be left as a solvent entity, in charge of its own finances and able to trade on - but many of its assets may have gone.

How bad can things get?

If restructuring is not successful, administrators will move to liquidate the company, selling off its assets to pay back creditors like banks and bondholders.

If all the debts are met and there is money left over, this is distributed among shareholders.

Huddersfield Town chairman David Taylor
"We don't want this club to go into administration"

Full analysis
Links to more Football stories are at the foot of the page.

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