ACL were unwilling to accept the Company Voluntary Agreement (CVA) that was put before them by the club.
Had that agreement been made, the club would have been able to come out of administration, for which they were deducted 10 points last season.
Another points deduction of at least 15 points now seems very likely going into the new season, which they start tomorrow away at Crawley.
This is the result of months of conflict between the two parties over the club's tenancy at the Ricoh Arena. The club were planning on leaving the Arena and playing their games at Northampton's Sixfields Stadium whilst they found a new home.
It was thought that ACL had offered a new tenancy agreement to the club at a reduced rate, but after today it is more than likely Coventry will be playing their home games at Northampton this season.
The club released a brief statement on their website, which said-
"It is with great regret that a proposed Company Voluntary Agreement (CVA) has been rejected by Arena Coventry Limited (ACL),"
"The football club and the Alan Higgs Centre Trust accepted the administrator's CVA, but the City Council, through ACL, have chosen to reject it - leading to the risk of a 15-point deduction."
"The club will hold urgent meetings with the Football League to go through the next steps for the football club."
For Coventry's fans it is a doubly bitter pill to swallow, as the club faces a points deduction and the prospect of making the trip to Northampton to see their club play.