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Liverpool face nine-point deduction if RBS intervene


New twist: Liverpool could face points penalty if bank calls in debt. Photo: Getty Images

New twist: Liverpool could face points penalty if bank calls in debt. Photo: Getty Images

New twist: Liverpool could face points penalty if bank calls in debt. Photo: Getty Images

Liverpool will almost certainly be docked nine points if Royal Bank of Scotland are forced to intervene to ensure that the club is sold to New England Sports Ventures, Premier League sources have confirmed.

The move could see the new owners beginning their tenure with Liverpool rooted to the bottom of the league with minus three points.

Club chairman Martin Broughton is seeking High Court approval in the coming days to complete the sale against the wishes of co-owners Tom Hicks and George Gillett.

Should the court find in the co-owners’ favour, however, RBS may be required to call in loans and penalties totalling around £280m, which become due on October 15.

This will force the holding company, Kop Football (Holdings) Ltd, into administration, triggering a likely points deduction.

Premier League sources confirmed today that this would trigger a “significant risk” of a points deduction, even though the insolvency was at the holding company and not the club, and despite Liverpool FC itself being solvent.

The league’s guidance to clubs states that an insolvency event at holding company level will incur a points deduction unless the club itself is solvent, and can demonstrate that the insolvency is not caused by matters “relating to the management of the football club”.

Given that Hicks and Gillett were only able to buy Liverpool with the loans from RBS it will be very hard for the club to argue that the insolvency is not related to football matters.

Given those circumstances it is likely that the Premier League board would order a points deduction, the second in less than a year following the administration of Portsmouth.

There is no direct parallel with the Liverpool situation, although the cases of West Ham and Southampton are instructive.

West Ham avoided administration when its holding company, Straumur, went into administration last year because the club itself was solvent, and the insolvency was triggered by problems with Straumur’s Icelandic-based companies, not the club.

Southampton were docked points by the Football League when its holding company was pushed into administration because the club was its only asset, and the football itself was insolvent.

Later today the Premier League is expected to complete its checks on NESV’s proposed directors, clearing the way for the transaction to take place.

John W Henry and Tim Werner have met with league chief executive Richard Scudamore, a condition of the league’s new owners and directors’ test, and they and two others have been cleared to take a seat on the Liverpool board.

They have also had proof of funds, and seen a copy of their initial business plan for the club, which is required to satisfy the league that NESV have the means to see the club through to the end of the season.

They will wait until the transaction has been cleared by the courts to see a final business plan, however.

The league has conducted the same tests on a rival Asian bidder, including meeting with its principals. This will allow them to step in should the NESV bid falter.