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ADMINISTRATION: BIG DAY FOR DEPORTIVO

10 Jan 2014
Key day in the administration process. The creditors’ meeting of Deportivo takes place today. Probably the plan of the club is the one that will prevail. The position of the Tax Agency is a big concern as it can lead into a new crisis.

It’s the most important day in the administration process of Deportivo, because today it will be decided the way in which the club must face its reported debt (€160,079.603.25). The act takes place at 10h30 CET and, if the 51% of the creditors with the right to vote are present, they will choose between the two plans that were approved by the judge.

What will happen is that the creditors owing the not privilege debts are going to vote on which plan they prefer. First they will vote on the plan present by Lendoiro, and if this plan doesn’t obtain the majority of votes then they will decide on the second plan, which is the one proposed by the Tax agency (AEAT). The characteristics of both plans are:

1- Depor’s plan: To forgive the 33% of the not privileged debt (€60 million), to fix a deadline of seventeen years to make the payment of the debt (shortage of two years), plus fixing the 20% of the yearly incomes to pay the debt. Of this percentage the 25% will be used to pay the not privileged debt, the rest it’s to pay the privileged debt. Finally, the plan proposes that no interests will be charged in yearly payments.

2- AEAT´s plan: To forgive the 45% of the not privileged debt (€60 million), to fix a deadline of ten years to make the payment of the debt, there’s no shortage and the payments are fixed, which means that Depor would have to pay a fixed amount for each year no matter the league where it plays and it’s incomes. The yearly interest is 2%.

It’s expected that the plan that will be chosen is the one of Deportivo. Lendoiro seems to have the support of the LFP and the Players’ Association (AFE), two of the biggest creditors with the right to vote. As soon as one of the plans is selected, and after the approval of the judge is made, technically the club ends the administration process, which leads to the exit of the Bankruptcy Administration as the club already will have a guide to pay the debts.

The big concern is the position of the AEAT. The chosen deal during the meeting has no effect over the privileged debt and the agency doesn’t want to accept the proposition of the club regarding receiving the money throughout the next seventeen years; they only accept to negotiate if their plan is the selected one.

The fear is that the AEAT can start to demand the payment of the money owed to them, which can lead to new embargos. It’s a similar case to what’s currently happen at Racing Santander, club that after the creditors meeting is facing big problems to survive, because the Spanish treasury ordered an embargo for €9.5 million. For this reason the Cantabrians have been unable to paid their players and employees.

One of the club’s administrators, Francisco Prada Gayoso, explained the situation in an interview at La Voz de Galicia, “We have had intense contacts with the Tax Agency and they told us that they weren’t satisfied with the proposed plan by the club. Since this point of view the treasury already told us the conditions in which they are able to negotiate, and for us to try to impose another thing is something that’s too risky. And they already told to the board of administrators, to one of the candidates [Tino Fernández] and to us that they are not open to concede delays for the privileged debt. In any case I don’t know if what the Tax Agency told me is true.”

ARCHIVE NEWS JAN/14

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