Following HM Revenue and Customs’ petition to wind up the club, Scunthorpe United’s future is beginning to appear more unclear.
Despite a takeover appearing to be completed in December, owner Peter Swann has continually tried to sell the National League team. As of this writing, no confirmation has been issued.
The club, which currently sits at the bottom of the National League after being demoted from the English Football League for the first time in 72 years last season, is having difficulties both on and off the field.
What does the winding up petition mean for Scunthorpe FC
The tip of the iceberg for Scunthorpe’s problems off the field is the winding-up petition that HM Revenue and Customs has now issued to the Iron over an alleged unpaid tax obligation.
Any unpaid creditor who owes more than £750 to the firm may file a winding-up petition, which asks the courts to order the company into compulsory liquidation.
The action was taken against Scunthorpe United Football Club over tax debts of around £190,000. The National League Club has been up for sale since September and the club has been struggling financially for some time, exacerbated by the impact of COVID and playing behind closed doors. They continue to lose around £100,000 a month and wages were paid late in November.
It is not uncommon for clubs to fall behind with tax debts to HMRC, mainly due to cash flow timings, a large amount of income is received prior to the season starting in the form of sponsorship, ticket sales and TV income with the idea that this funds player transfers. However, later in the season as income dries up it then becomes difficult to pay key creditors and expenses like wages and HMRC.
Petitions, if unopposed, frequently signal the start of a company’s demise. If debts are not paid following the petition, assets may be blocked, and winding-up orders may be issued.
Future for the club
The club has hired a corporate restructuring expert to assist with finding a buyer, and Scunthorpe MP Holly Mumby-Croft has stated she will endeavour to find a resolution to this problem.
A legal battle between Peter Swann and Apollo Bookmakers Limited is currently pending in the High Court. According to records that have been made public, Swann bet an estimated £20 million on various events during a three-year period.
Following the publication of these court documents on social media, the owner of Scunthorpe United quickly responded, claiming that the events surrounding the dispute were “entirely and categorically unrelated to the finances of Scunthorpe United Football Club and/or the companies which are involved in the running of the football club.”
Swann continued, “Money that I wagered on various sports (I did not wager on football) was all my own personal money, and the proceedings were brought because I felt (and still feel) that I needed to make a significant statement against a company that I believe took advantage of and exploited me, at a very trying time in my life.
“Therefore, I will continue to hold that position and conduct these proceedings in accordance with that position. I request that all parties respect the ongoing legal processes while the Court is handling them.
The club’s future remains uncertain, but for the time being, attention will be focused on the Iron’s league game against Woking on Saturday, January 14, as they attempt to climb out of the bottom half of England’s fifth division.
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With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.