The owner of West Ham, Bjorgolfur Gudmundsson, has until the 6th March to sell the club before his holding company, Hansa, faces the possibility of being declared insolvent, court papers in his native Iceland have revealed. Gudmundsson has put West Ham on the market in order to pay back debts exceeding £50m that resulted from the collapse of the Icelandic bank Landsbanki, in which he held a 41% stake.

According to documents seen by the Guardian, court officials will reconvene in Reykjavik after the deadline to decide if Hansa is in a position to repay its creditors, or has to be declared insolvent and subsequently stripped of its assets, including West Ham.

That could lead to the club being placed in administration in order to keep it alive.

If that happens, the Premier League has confirmed West Ham would be hit with an immediate points deduction. "Any club within the division that suffers an insolvency event will automatically receive a nine-point sporting sanction," a spokesman said.

However, sources close to the Icelandic financier stated: "There is no urgent need to sell West Ham before March - that court appearance is just part of the normal procedure that takes place in Iceland in dealing with these situations."