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CVA - Questions and Answers
Basically, all creditors of the club (except a very small number of preferential creditors) are now bound to accept an amount (said to be 1p in the pound) in satisfaction of their debts. £5.3m - or whatever the final figure was - has become a much more manageable £53,000.
So that's it?
Yes. An aggrieved creditor can challenge the CVA for a period of 28 days, but only if they should have had notice of the meeting and didn't get it. You'd hope that no-one significant has been forgotten!
The other big thing that need to happen is the share in the football league needs to be transferred to the new company. To do that the FL and FA will need to be satisfied that D&D are fit and proper people, that all football creditors have or will be paid in full and that the club has the right to stay at Millmoor for at least 10 years.
When Boothy took over the club entered into CVA and that lasted for years - are we going to be paying our debts for seasons to come?
No. The CVA is a one off payment. It's made very soon (perhaps by the end of the week) and then that's it. Clean slate.
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No. The business and assets of the club are to be transferred to a brand new company, in which RUST is not a shareholder. RUST holds shares in the old, bust, company. The purchase price for the club funds the distribution under the CVA.
So, if you bought a brick or contributed through RUST, that money's effectively gone?
'fraid so.
What about the concessions and the deal with Nike - are they now terminated?
The contracts are all with the old company, not the new company and the new company doesn't automatically take them over. So D&D can renegotiate. The CVA probably means the concession holders etc can terminate anyway so there's a lot of scope for renegotiation. Basically, neither side is bound by the contracts unless they want to be now.
Hang on, though, isn't the lease of the ground in the name of the old company?
Yes. Presumably, though C F Booth will just assign the lease across, though it could renegotiate terms or even kick the club out if it really wanted.
And player contracts - are people like Williamson now out of contract if they were employed by the old company?
No. They go across to the new company by operation of something called the Transfer of Undertakings (Protection of Employees) Regulations. So no-one will be able to steal Worrell and Montgomery from us.
So we now lose 10 points?
Looks like it. The FL rules say that if you suffer an insolvency event then you lose 10 points. It's a moot point whether CVA's (as opposed to administration) are specifically covered by the rules, but the FL is unlikely to let us escape on a technicality.
And it's next season, right?
Should be and 99% will be. The insolvency event has taken place after we've fulfilled our season's fixture commitments so the rules say its ten points off from next year. Hartlepool, though, have lobbied the FL to deduct them this year and the FL don't always follow their own rules (though they've said it's next year in the Yorkshire Post so I'm not too concerned).
But we can appeal, right?
Yep.
And we might win?
We might. And Leo Fortune West might get called up the England squad to replace Rooney.
Not likely then?
Nope. The FL is unlikely to set a precedent of a club escaping the 10 points because that will "encourage" others. Plus, we haven't really got a case. The ITV Digital debacle has hit loads of clubs hard but most (typically through loans from wealthy owners) have got through it. And anyway, Butler, Gilchrist etc all signed after the collapse of ITV Digital.