Club news

ADMINISTRATION: THE PROPOSAL OF THE CLUB

07 Nov 2013
Deportivo presented yesterday its own proposal in order to face the debt. It’s the second plan presented, previously the one of the AEAT was dismissed by the judge. The club wants to pay the debt in 17 years and forgive the 33% of the not privileged debt.

The deadline to present proposals for the payment of the club’s debt is at the end of the month and on Tuesday Deportivo presented its plan to the judge. It’s just the second plan presented as some weeks ago the Tax Agency [AEAT] presented their one, which was already ruled out by judge Rafael García as it was only offering a 10-year deadline in order to pay the debt.

The axes of Depor’s propositions are two points: to forgive the 33% of the not privileged debt and to establish a deadline of seventeen years in order to pay the privileged debt. The deadline consists of three parts: a shortage of two years, fifteen years to pay the privileged debt and another seventeen years to pay the not privileged debt, which means that the full debt could be paid in 34 years.

The global debt presented by the Bankruptcy Administration [BA] is €160 million; of this amount €35 million are not privileged debt, which means that, taking in mind the proposition to forgive the 33% of this debt, the final debt of the club could end up at €139 million. It’s a very high amount considering the current finances of the club.

Also to clarify that currently there are €21 million frozen in the bank accounts of the club, the proposition of Deportivo is to use this money to pay part of the privileged debt, so the final debt could be decreased to €118 million; from this amount €98 million would be privileged debt, which means the debt that should be paid in the first seventeen years (around €5.77 million per year).

Despite the latter calculation of €5.77 million per year, the club wants to establish a fixed percentage of the incomes in order to pay the debt: 20%. The reason is that Deportivo won’t necessary compete at Primera during in all of those years, Instead of establishing a fixed amount; the club is fixing a percentage of the incomes. According to the club €32 million per season are the possible incomes at Primera, while the amount is reduced to €14 million at Segunda.

Besides, the proposition fixes a 30% of the extraordinary incomes in order to face the debt. This means that the money collected through the transfer of players or possible increases in the club’s capital will need to exclude the 30% in order to face the privileged and not privileged debt.

The shortage of two years is part of the proposal as the club needs to face the €6 million that are part of the current costs [players wages, lawyers and others] Then the club would have the stability to start paying the debt beginning on the season 2015/16.  The proposal also includes the petition to not pay interests.

Finally, the club already has the agreement of the LFP and the Players Association, which means a big support as they are the biggest creditors among the not privileged debt. This could be a crucial point as they’re the main voters during the creditors meeting that will take place on January 10.

ARCHIVE NEWS NOV/13

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