Race Against Time
By Jim Bonner
Updated Wednesday, 14th December 2011
Pompey must pay £1.2 million in April as part of the CVA.
The local news has ran with the story today that Portsmouth FC must pay Alexandre Gaydamak an "estimated" £1.2 million in April as part of the first stage of the CVA.
Of course, without an owner (UHY Hacker Young technically owns the club whilst CSI remains in administration) there will be no means of paying Gaydamak, the club's only secured creditor.
This means that there may well be a fire sale of players next month in order to raise funds to pay him what he is owed. David Lampitt says that there are no such plans for such fire sale and there is "significant interest" in buying the club, but would you simply take his word for it?
The fact that Pompey might have to sell their better players may be a short-term concern to the fans but there may well be a much larger problem on the horizon given the nature of how this CVA will be pad.
The report from The News today states:
The first instalment of the cash owed to unsecured creditors seeking more than £2,500 is due on April 1, 2012, under terms approved in the Company Voluntary Arrangement (CVA) signed to bring the club out of administration last year.
An estimated total of £16.5m will need to be paid back in instalments as part of the agreement – but the first £2.2m will go straight to Mr Gaydamak, as he is the club’s only secured creditor.
Under the requirements of the CVA, a further estimated £1.2m will need to be paid on August 15 – and again, most of that will go to Mr Gaydamak.
Only then will other creditors who are owed more than £2,500 begin to be paid. Around £4.1m needs to be paid in equal instalments on April 1 and September 1, 2013.
A further payment is due on April 1, 2014, and the balancing figure to comply fully with the CVA is required to be paid on June 17, 2015.
That's one hefty commitment, as if we ever needed reminding. It's the small creditors who I feel sorry for. They are the genuine, honest working people who have had their patience tried time and time again by the people who have shambolicly ran this football club in the last few years.
Back to the "larger concern" on the horizon and should Pompey fail to make their first payment in April, then our old friends from HMRC may well be paying us another visit.
And I think we all know what that will mean.... (Hint: It won't only be the Southampton fans winding us up...)