Chelsea reported losses of 44.4 million pounds ($70.60 million) in the club's end of year results on Wednesday, including a 12.6 million-pound compensation payment to a former manager and his coaching staff.
Chelsea FC plc said in a statement the remainder of a 340 million-pound loan from its parent company, owned by Russian billionaire Roman Abramovich, had been turned into equity and had made the group "debt free".
"The club's debt load has been reduced almost to nil in order to provide more long-term stability," chairman Bruce Buck said in a statement.
"The reduction will also enable the club to comply with any regulations on debt levels which are being discussed by the football community."
UEFA president Michel Platini revealed financial fair play plans this year to make clubs live within their means by linking spending on players to revenues.
Chelsea's losses fell by 21.3 million pounds to 44.4 million, while turnover was down from 213.1 million to 206.4 million.
Brazilian coach Luiz Felipe Scolari was sacked by the west London Premier League club after seven months in charge last February following a poor run of results.
Dutchman Guus Hiddink replaced him until the end of the season and Italian Carlo Ancelotti was appointed his permanent successor in June.
