Derby faces the prospect of falling to the bottom of the championship after confirmation that he will be assessed a 12-point penalty for claiming to have filed a director appointment notice.
Derby said they “had no choice but to make the difficult decision” due to “a number of developments” including the inability to identify new owners and the continued impact of the pandemic on sources of income.
Derby, which remains under a transfer embargo, already faces a separate and additional points penalty for breaking Football League financial rules.
“The EFL can confirm that the club will be subject to an insolvency case under the terms of the EFL rules,” read a statement from the Football League. “As a result, the club faces a 12 point deduction. Once the EFL has received formal notification of the request, the deduction will be applied. Derby could appeal the 12-point penalty, as EFL regulations allow appeals in “force majeure” cases.
In a statement, Derby said: “Last week it became clear that the ongoing process to identify a buyer for the club is unlikely to be productive in the short term, despite negotiations with credible parties.
“Because the Covid-19 pandemic has had a severe impact on revenues and profits from all of its activities, the club has not been able to meet its daily financial obligations. The managers had no choice but to make the difficult decision to take this step and protect the club. “
The statement continued: “The irony is that the club’s financial forecast shows the emergence of a financially viable image. Without the Covid-19 pandemic, we undoubtedly would have been able to trade. The club’s income and cash flow has taken around £ 20million.
“We cannot stress enough that it is devastating to be forced into this position. We will continue to work under the direction of the directors to facilitate their process and efforts to find a buyer. “
Derby went on to say their current financial situation was in part due to the EFL’s refusal to sanction the club’s £ 8.3million financial aid for Paye’s debt settlement, according to other clubs . However, the EFL denied the club’s request, responding: “The league is disappointed with the comments made by the club regarding Covid’s loan facilities. The EFL contracted an increase in debt to provide its clubs with access to funds that would help them cope with the impact of Covid and, as with any loan, this was subject to a deadline and criteria. eligibility that Derby County was unable to. meet.”
Derby escaped relegation from the league on the final day of last season after a 3-3 draw with Sheffield on Wednesday. The club then avoided a point deduction, which would have fired them, when the EFL decided not to appeal a decision to impose a fine only on the club for failing to follow financial rules.
Owner Mel Morris has seen two potential deals to sell the club fail, while on the pitch Wayne Rooney inadvertently hampered the club’s resources by injuring midfielder Jason Knight in a training match in July . The Republic of Ireland international suffered an ankle injury and only returned to the game last week, in the 2-0 loss to Birmingham.
Rooney’s side, 16th in the championship, have won just one of their first seven games of the campaign. As it stands, a 12 point deduction would drop them to last place with minus five points.