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 Posted by ESPN Staff
May 27, 2006

Court places Universidad de Chile in bankruptcy

SANTIAGO, Chile, May 27 (Reuters) - A Chile appeals court declared one of Chile's most popular soccer teams, Universidad de Chile, bankrupt on Friday on petition from the country's treasury department which is owed £8million by the club.

The treasury department filed suit against the team in 2004, asking it be declared bankrupt so it can recover money owed.

The team's owners, who dispute the amount of money they owe the state, can appeal the ruling to the Supreme Court. If the appeal fails the courts will put the team in receivership. 'It gives me the impression something strange is going on because it's not logical,' Lino Diaz, president of team owner Corporacion de Futbol Universidad de Chile, said of the ruling on Cooperativa radio.

Diaz complained that the judges on the appeals court had not respected a law that gives sports teams new mechanisms to renegotiate their debts. The team's lawyer said other Chilean teams have benefited from the law and been given more time to sort out their debts.

Universidad de Chile's main rival, Colo Colo, was declared bankrupt in 2002, but moved out of bankruptcy two years later and became the first team in the Americas to quote on a stock exchange.