Football Index Administrators Request Speedy Resolution
The administrators acting for Football Index have asked for a quick resolution to proceedings. The Premier League share dealing platform went into insolvency, leaving many customers out of pocket and with an anxious wait to find out if they would see a return of funds.
A court hearing to determine the cash distribution of £4.5m held by Football Index’s administrators has begun this week, with the company involved urging a speedy resolution.
Begbies Traynor, who are rescue and recovery specialists, was appointed in March this year to administrate the finances of Football Index. However, the company have revealed that they are under increasing pressure from the UK Gambling Commission to resolve the issue sooner rather than later.
In a witness statement to the court, Begbies Traynor’s Adrian Hyde said: “The joint administrators would be most grateful if the application could be heard as soon as possible,”
“The reasons for the urgency are because the company is regulated by the Gambling Commission in the UK and the Jersey Gambling Commission in Jersey.
“Both commissions are understandably very keen for the monies in the trust account to be disbursed to the proper beneficiaries as soon as possible, and the UK Gambling Commission, in particular, is applying a significant amount of pressure in this regard” Hyde added.
At the end of April this year, Begbies Traynor applied for the Business and Property Courts of England and Wales to assess how the £4.5m being held in the Football Index Player Protection Account should be distributed. The company also asked the court to identify which customers would be eligible to reclaim funds.
Hyde stated to the court that this would be the first step towards distributing the cash balances to customers who are owed this money from the Football Index platform.
Under consumer protection laws, a company is required to separate customer’s cash balances from operating funds. The Football Index Player Protection Account is managed by Nedbank, based in the Isle of Man. Nedbank froze assets in the held account when rumours regarding Football Index’s financial problems began surfacing.
It is understood that the administrators have instructed Nedbank to transfer all funds held by Football Index into the Viscount’s Department’s bank account in Jersey, but this transaction has not yet been completed due to the May bank holiday. The Viscount’s department deals with bankruptcy (désastre) and debt remission orders (DRO). Football Index allowed customers to buy shares in Premier League players, with the value of these shares rising and falling depending on the player’s performance on the pitch. In addition, the player’s social media activity or mentions in the press could also affect the share value.
When buying shares, the customer was making a three-year commitment to these shares. The platform initially enabled consumers to sell these shares back to Football Index by using the Instant Sell option. However, the company removed this option last year, introducing an order book system instead. It was a move that was unpopular with customers, and the value of shares plummeted as a result.
The company, before its collapse, also severely reduced the dividend values. Before the change, customers could earn more than 30p per share help; this payout was dramatically reduced with a value of 1-2p a more typical return.
As Football Index’s funds have been frozen, customers are unable to withdraw account balances. However, as the app still calculates dividends, customers see an increase in the balances they have with the company. A situation that Hyde says is misleading.
“This is misleading to the customers because there are no more transfers being made from the company’s general account to top up the trust account,”
“On the face of it, the accruing but non-transferring post-administration dividends represent an unsecured liability of the company owing to the trust beneficiaries.” Said Hyde.
One of the roles Begbies Traynor are tasked with is deciding the end date for liability. The company have recommended that the date Football Index went into administration is the appropriate calculation date. Meaning payment of dividends would only be calculated up to the 26 March date.