Nottingham Forest have revealed they are "confident of a speedy and fair resolution" after being charged with breaching the Premier League's Profitability and Sustainability rules.
Forest, along with Everton, were charged after admitting to being in breach of the rules, after going above the threshold for losses permitted over a three-year period.
While the rules state that Premier League clubs can only record losses of up to £105m over a three-year period, or £35m-per-season, those figures differ if a club has spent time in the Championship.
The breach relates to losses made between the 2019-20 and 2022-23 seasons, with two seasons being grouped together because of COVID, and Forest spent two of those three financial years as a Championship club.
That therefore reduces the losses permitted by £22m-per-season, meaning that Forest could only lose a maximum of £61m over the entire period.
The Premier League's statement read: "Everton FC and Nottingham Forest FC have each confirmed to the Premier League that they are in breach of the League's Profitability and Sustainability Rules. This is as a result of sustaining losses above the permitted thresholds for the assessment period ending Season 2022/23.
"In accordance with Premier League Rules, both cases have now been referred to the chair of the Judicial Panel, who will appoint separate Commissions to determine the appropriate sanction."
Upon their promotion to the Premier League in 2022, Forest broke the record for number of incomings in one window, when they signed 21 players during the summer window ahead of their return to the top flight.
As many players left after the expiration of their contracts, and more returned to their parent clubs following loan spells, Forest had to virtually rebuild their entire squad in order to be competitive in the Premier League.
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Club owner Evangelos Marinakis has spent big since promotion though, breaking their transfer record in back-to-back summers to sign Morgan Gibbs-White and then Ibrahim Sangare.
Forest's total spend since promotion is believed to be in the region of £250m, and they have not made enough back in player sales to cover up the losses made from their heavy activity in the market.
However, a contentious area surrounding the breach comes from the sale of Brennan Johnson to Tottenham Hotspur on deadline day back in September.
Forest were patient and bided their time in order to get a higher fee for Johnson, who eventually left for £47.5m, but that came after the accounting deadline for the 2022-23 season which was June 30 of last year.
The club could have sold Johnson earlier in the window before the accounting deadline, but for a much lower fee, and claim that holding out for a larger sum should come into consideration.
A club statement from Forest read: "Nottingham Forest acknowledges the statement from the Premier League confirming that the club has today been charged with a breach of the league's profitability and sustainability rules.
"The club intends to continue to cooperate fully with the Premier League on this matter and are confident of a speedy and fair resolution." the club added.
Forest will have 14 days to respond to the charges, and the issue must then be resolved within 12 weeks, meaning that the decision may not be confirmed until after the current season is finished.
Everton have already received a 10-point penalty this season for the same breach, and if the Toffees are to receive another one, along with Forest, the two would be plunged into the bottom three.
Andrew Delaney
