High Court delays decision on Football Index administration
The High Court judge has reserved his decision over the Football Index player protection fund, possibly until next week.
UK.- The conclusion of administration proceedings for BetIndex, the operator of the failed football player trading platform Football Index, continues to face delays.
A decision on how to allocate money from the Football Index player protection fund was moved to the High Court from Insolvency List at the Business and Property Courts of England and Wales. Now after finishing its hearing, the High Court has reserved judgement, possibly until next week, due to judge Robin Vos’s trial commitments.
Football Index said in a statement: “The High Court has concluded the hearing of the Administrators’ application for guidance on the distribution of the Player Protection Fund monies. Following lengthy argument for several different dates, the Judge has reserved his decision.
“As soon as the judgement is released we will provide further details of the payment process, and ensure that payments are made at the earliest possible time.”
Vos must make a decision on where to set the cut-off date up until when player’s bets should be considered active for the purposes of allocating winnings from the player protection fund.
He acknowledged in court that whatever decision he made, it would impact negatively on some customers depending on when they placed bets.
He said: “I understand that no matter what way I rule, there are going to be people who lose out and people who do better.”
Lexa Hilliard QC, who is representing Football Index’s administrators Begbies Traynor, was of the same opinion:
“Either way, depending on what type of customer you are, it’s going to be unfair to somebody,” she said.
BetIndex plans to relaunch Football Index
BetIndex has revealed plans to relaunch Football Index with customers to receive equity in the business.
The operator, whose Gambling Commission licence has been suspended, said customers would be given equity in the business through a proposed Company Voluntary Arrangement (CVA).
The platform would keep a similar format but BetIndex said there would be differences to make it financially viable. Rather than seek to retain its remote betting licence from the Gambling Commission, BetIndex might opt for a pool betting licence instead.
BetIndex said that the relaunch would allow players to receive roughly 20.5p for every pound owed. A £7m share pool would be created to continue dividend payments, but dividends would be suspended for six months.
A customer trust would divide a 50 per cent equity stake between existing customers who had an active portfolio on Football Index at the time the company entered administration. BetIndex’s administrators, Begbies Traynor, said this would be possible since “the underlying business model is attractive to customers and financially sustainable”.
Shareholders in Index Labs Ltd, which owns BetIndex, would have to vote to agree to relinquish control of the company. The remaining 50 per cent equity in BetIndex would be held by an investment trust in a bid to attract external investors, who could create a possible exit for players in the customer trust.
Customers would have the right to become corporate members, which would allow them to vote to elect members of the board of directors.
BetIndex planned to go into administration days before dividend change.
The operator revealed the relaunch plans as the High Court opened a hearing on its administration on Friday. The High Court must decide how to distribute the £4.5m in BetIndex’s player protection account among customers who had funds trapped in Football Index when the company entered administration.
Documents submitted to the court have revealed that BetIndex decided to go into administration on March 5, three days before implementing a change to its dividend structure that caused customers to start pulling out of the platform.
On March 8, the company cut dividends. It announced it was entering administration on March 11.
The exodus of investors that followed the dividend change was thought to be responsible for the company entering administration, but the documents show that BetIndex had already taken the decision.
The company also submitted to the High Court minutes of its board meeting on March 5 March. They show that the board decided to go into administration in the UK instead of in Jersey, where it is headquartered, in order to have more options.
The minutes read: “The options for a Jersey company are far more limited than a UK company. Jersey processes do exist however they are unlikely to be as effective as UK administration.”
Documents also show that Football Index’s co-founder and chief executive Adam Cole agreed to step down at a board meeting on December 11 because the company was suffering losses due to its dividend exposure.
What is Football Index?
Launched in 2015, Football Index was billed as a “stock market of football”, allowing gamblers to buy “shares” in footballers and receive dividends based on their performance. Customers could trade shares with others for profit, paying a small commission to the Football Index platform.
The Advertising Standards Authority criticised Football Index in 2019 for “creating the impression the product was a lucrative investment opportunity”.
Championship football teams Nottingham Forest and Queens Park Rangers have dropped Football Index as their shirt sponsor and the UK government has announced an investigation into the platform’s collapse.
Lawyers are investigating the possibility of a class-action lawsuit from customers, which may target the Gambling Commission, which has been criticised for its handling of the matter.
