Portsmouth's draft repayment schedule to be arranged
Mon 10th May 2010 | Football Club Administration
Portsmouth' FC’s creditors met on Thursday and have decided to draft a Company Voluntary Agreement (CVA) says the BBC. At the meeting it also became apparent that the club, which entered administration in February with debts of £ 60-70 million, currently has a debt of £135 million. The CVA will allow Pompey to come out of administration. It was also clear at the meeting that there was no real alternative to this which will allow the creditors to collect any of their debt.
Portsmouth's plan over the next five years is to pay at least 20 pence in the pound and current owner Balram Chainrai will incur a personal cost of £200,000 and repay small creditors, less than £2,500 each category, and also charities. The CVA will be drafted and distributed by the joint administrators from UHY Hacker Young within the next 10 business days. Subsequently a meeting will be held within 14-28 days and in this meeting the CVA will have to approved by at least 75 per cent of the unsecured creditors of the club.
According the rules of football administration, Portsmouth's "football creditors" will have to repaid first. This list includes the transfer fees of £17 million and bonuses, wages and image rights payments for current and former players which is around £5 million. Chainrai will be paid back his £14.2 million loan in this category but previous owners, Sacha Gaydamak, Sulaiman Al-Fahim and Ali Al-Faraj, will be categorized as non-football, unsecured creditors. Her Majesty's Revenue & Customs (HMRC), which is owed £35 million, will also be treated as an unsecured creditor.
According the draft, Portsmouth City Football Club company will be liquidated after nine months and a new company will be created. The new entity will inherit the club's assets and the CVA. HMRC has agreed to the liquidation because it will allow a comprehensive investigation of the financial collapse at Portsmouth. The first year's expenses for the CVA will come from transfers and reduction of the wage bill with the target being to reduce the current £40 million to £10 million. Subsequently the club will be run with money from its revenues and from the parachute payments that relegated Premier League clubs receive.
Ocadia,a Gaydamak investment arm, the Professional Footballers' Association, football agents Capstone and two local suppliers acting in concert comprise the creditors' committee.
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