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Q&A: What will happen if Dunfermline go into administration or liquidation

A look at the questions thrown up by the possibility of the Pars going out of business.

Dunfermline staff recieve donations for the club due to their current financial situation.
SNS Group

The future for Dunfermline Athletic is looking bleak, with the club having until 5pm on Monday to settle a £134,000 bill to HM Revenue and Customs.

The alternative for the Pars would be liquidation enforced by their failure to pay the tax man, or a last ditch petition to go into voluntary administration on Monday ahead of possible winding-up hearing on Tuesday.

STV have taken a look at the possible outcomes for Dunfermline, and the impact administration or liquidation could have on them and other clubs.

What happens if Dunfermline go into administration?

If Dunfermline are granted administration by the courts then they are offered protection from creditors.

This would halt the immediate threat of liquidation and allow time to put together a CVA proposal in an attempt to allow the company to continue trading.

Any successful CVA would result in creditors being offered a pence in the pound deal for their debt.

Agreement much be reached with 75% of the total value of creditors for a CVA to be passed.

Would they be docked 10 points?

The club could incur a points penalty under Scottish Football League rules.

That punishment is not fixed, leaving the SFL free to “deal with any member which acts against the best interests of the League in any way it sees fit.”

The most recent example of this is the administration of Dundee in 2010.

The SFL board elected to deduct 25 points from the then-First Division club, an amount which was designed to effectively ensure their relegation. As it was, the Dark Blues embarked upon an unbeaten run and stayed in the league.

The relevant rule in full states: “The Board shall have full power to deal with as it thinks fit, including power to deduct Championship points before or during a season and/or to impose a player registration embargo on a Member whom it finds to be guilty of conduct contrary to the interests of the League and its members or which is potentially likely to prejudice the orderly progress of the League Championship and/or the League Challenge Cup Competition in any season.

“For the avoidance of doubt such conduct may include a Member being in or taking steps to enter or being subject to proceedings which may result in the Member entering Administration, Liquidation, Sequestration, or having a receiver or judicial factor or trustee appointed to it or to substantially all of its assets, or becoming subject to any other form of insolvency procedure or arrangement or compromise with or for the benefit of its creditors.

“For the further avoidance of doubt, a Member in or going in to any such process will remain responsible for the purposes of these Rules for the conduct of its undertaking by any Administrator, Liquidator, Receiver, Trustee, Factor or Supervisor or any other such officer appointed to it or to its undertaking.”

What happens if Dunfermline are liquidated?

If they go into liquidation during the season, and subsequently cease to be a member of the league, all games the Pars have played so far this campaign will be declared void.

This will have a negative effect on the league table, particularly in the race for promotion. Leaders Greenock Morton have taken seven points from Dunfermline this season while Partick, currently two points off the top, hav e taken nine.

As a result, the disappearance of Dunfermline would create a four-point gap between the title contenders.

At the opposite end of the table, Airdrie United would suffer, having taken a point more than relegation rivals Dumbarton from matches against Dunfermline.

As has been seen with other clubs defaulting in the SFL, the number of relegation places from the First Division this season would be reduced.

Assuming reconstruction of the leagues does not go ahead, it means the team finishing ninth in the table would retain their place in the division.

The team bottom of the league, currently Airdrie United, would participate in the play-off with three Second Division clubs. Promotion from the Second Division would go ahead as normal.

What happens to Dunfermline’s players?

If they go into administration, the players will remain with Dunfermline. An administrator may ask them to take a wage cut, or terminate the contracts of some or all of the squad.

Should Dunfermline Athletic go into liquidation, the contracts of every player would be terminated. Their registrations would remain with the Scottish FA, pending any new registration with another club.

Players would require FIFA dispensation to be able to play for another club this season. The deadline for any new registrations this season is March 31.

Could Dunfermline Athletic “newco”?

As was seen with Rangers in the summer, it is entirely possible for Dunfermline Athletic to go down the newco route.

In the eyes of the governing bodies, the status of the club would depend upon any Scottish FA decision to transfer the membership between the oldco and the newco.

Dunfermline could also down the Gretna route and form a new club, independent from the old club which was in membership of the Scottish Football Association.

Would the “newco” route mean Dunfermline would be in the Third Division next season?

As seen with Rangers in the summer, this would depend entirely on a vote of 28 Scottish Football League clubs.

Either a motion would be raised for members to vote upon giving the newco associate membership of the league, or an application process would be opened up for other clubs to vie for the vacant spot in the SFL.

Depending on the outcome of any process, the new SFL member would start in the Third Division.

How would this affect league reconstruction plans?

In the first instance, the voting requirement for proposals to go through would change from 22 out of 29 clubs to 21 out of 28.

Rangers are not allowed to vote, and Dunfermline’s vote would be removed as a result of their removal from the league.

In a logistical sense, the liquidation of the Pars wouldn’t have any major impact on reconstruction plans. The proposed play-off between the second lowest placed club in the First Division and the fourth placed side in Division Two would instead involve the team finishing bottom of this season’s First Division.

Could a newco take over another SFL club and rebrand it?

There is nothing in SFL rules which prevent a member club being bought over and then subsequently rebranded and moved.

If another club’s shareholders were willing to essentially shut down and sell to any newco, Dunfermline would have to gain approval from the SFL board.

SFL rule 86.2 states: “Any club wishing to make any alteration to the designated name of the club or ground must first obtain the prior written consent of the board.”

The league must also approve a club’s colours and kit designs before June 1 each year.

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