Not quite.
Afaiaa, the original club went into administration, with a new (fans-controlled) entity taking the former club's place, since at the time there was no actual provision in the IL Rules to deny a club "inheriting" membership in such circumstances!
Therefore, it was not a case of anyone "bending the rules", since technically no rule was bent/broken. Remember, this was before Licensing proper was introduced; since then the IFA has taken over the IL (as the FAI the LOI) and introduced a new Licensing Procedure which inter alia would prevent any re-occurrence.
And fwiw, the IFA does look determined to enforce the new Licensing provisions rigidly, if the example of Portadown FC - denied for submitting an otherwise valid Application 29 minutes late - is anything to go by.
Anyhow, this extract from Wiki seems reliable enough:
"The club's well-publicised financial problems had already overshadowed much of the 2003-04 season (despite a substantial donation from Cold Feet actor and Coleraine fan James Nesbitt) and at its end the club was forced to operate on a reduced budget, with several top players leaving. Despite this a top six finish was still achieved. The summer of 2005 saw more budget cuts and several big names leaving the Showgrounds, but this time the main concern for fans was the very future of the club. In August, the Inland Revenue filed for a winding-up order against Coleraine due to debts of £1.3 million. The Friends of Coleraine, worked tirelessly to persuade the High Court to postpone the hearing to allow them to put together a business plan to show that the club could be viably run. Eventually the court ruled in the club’s favour and they were allowed to enter administration and a steering committee was set up to run the club.
The club went on to defeat Instsitute to win the North West Senior Cup for the 17th time. Premier League survival was ensured on the pitch and in June 2006, the Friends of Coleraine formally took control of the club and appointed a new board. In 2008 the club reached the Irish Cup final, but lost 2-1 to Linfield"
http://en.wikipedia.org/wiki/Coleraine_F.C.
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