It’s only restricted Utd in their spending because they want to build a new stadium. The rules were written partly as you say to stop clubs going out of business but they are not fit for purpose and don’t allow for fair competition which is strangely a big part of city’s argument going forward.
I find it strange that club owners can’t spend their own money, yet other clubs are over £1bn in debt but can still spend because the rules only seem to cover revenue, but not debt