Football Index stimulus plans deemed ‘insulting’ by activists Business News

Plans to revive the collapsed betting company Football Index have been called “insulting” by activists who say customers who have lost millions of pounds are effectively being asked to pay for a worthless business.

The Football Index, which billed itself as the football stock market, went into administration in March with an estimated £ 90million debt to players.

Documents released by Football Index as part of the insolvency proceedings confirm that for months before its collapse, the company depended on new deposits to cover debts on existing bets and that it could never have been viable without a drastic reduction in payments.

They also show that Football Index paid its parent company £ 9million for ‘support costs’ last year and spent nearly a fifth of its income on marketing costs, including advertisements on the London Underground and the sponsorship of Queens Park Rangers and Nottingham Forest football clubs.

Football Index, a trading name of Jersey-based BetIndex, was supposed to keep just over two-thirds of the amount its customers set aside to pay what it called dividends to customers who bought “shares” of players from. soccer.

But documents show he owed clients £ 90million if all betting contracts were terminated and clients paid their initial stake less dividends already paid. “The total liability that would be owed to the clients, as unsecured creditors of the company, in these circumstances would be approximately £ 90,000,000,” the company said.

Despite its dire financial situation, Football Index aims to persuade clients to support a turnaround plan that would revive it.

According to the proposals, Football Index’s parent company, Index Labs, would maintain the company’s software – arguably its only valuable asset – while customers suffer huge losses.

“It would effectively force Football Index users to pay for the privilege of taking over a worthless business,” said Matt Zarb-Cousin, director of Clean Up Gambling, which supports those affected.

“It is insulting to the thousands of people who have lost vital sums of money after being misled. Fortunately, we are already ready for a fight.”

Documents show the company was losing money even before it doubled the bet payout in August 2020 in a bid to stimulate declining interest after games were suspended during the pandemic.

But that meant the company didn’t have enough revenue to cover the £ 2.2million per month it paid out in dividends to clients and its cash flow was quickly depleted.

The disclosures will come in addition to questions about monitoring by the Football Index Gambling Commission. Under heavy pressure, the regulator revealed in March that it had launched a formal review of the company in May of last year with the help of forensic accountants.

Yet, shortly after the review began, Football Index changed its betting terms, which meant it was on an unsustainable path while telling customers it was in good financial health.

The documents also reveal that Football Index’s insolvency specialist named Begbies Traynor on February 15, but continued to urge people to deposit more money until it collapsed on March 11.

Begbies Traynor declined to comment on why the company was allowed to continue accepting new bets during this time. BetIndex, did not respond to a request for comment.

Football Index is hoping to enter into a Corporate Voluntary Arrangement (CVA), an insolvency proceeding that would allow it to write off some of its debts with the aim of continuing to operate.

It would also mean that there is unlikely to be a criminal investigation. To move forward, the CVA would need the support of 75% of the creditors.

Lawyers considering legal action on behalf of clients said they were reviewing the newly released documents.

Paula Lee, partner at Leigh Day law firm, said, “Our investigation of potential claims that may be brought is ongoing and is unaffected by the administrative process.”

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This notice was published: 2021-05-21 22:17:06