CVA Rejected, But Two Definite New Bids Revealed

Last updated : 08 April 2008 By Bournemouth Co-Ordinator
Administrator - Gerald Krasner
At exactly 1100, Administrator Gerald Krasner opened the Creditors meeting at Dean Court to provide more detail on the current state of affairs with AFC Bournemouth.

Firstly he introduced those sharing the top table with him as his joint Administrator, Julie Palmer, and lawyer David Hinchcliffe.

Krasner started by thanking the media for their support in reporting the events at Dean Court and for publicising the sale of AFC Bournemouth.

Providing some scene setting Krasner went through events leading up to the Creditors meeting in which the Club went in to Administration on February 7th, incurring a 10-point penalty from the Football League as a result. Following those early days, there were 32 inquiries relating to the sale of AFC Bournemouth. Of the serious bids, just one was accepted, given that the Confidentiality agreements and proof of £3million was provided. Of the other bids, some were not serious, and some were more property related.

The one offer that was accepted (headed by Mostyn and Sly), collapsed collapsed last week.

To date £300,000 had been paid by Mostyn to fund the Club through Administration, but with the collapse of his consortium, the remaining £50,000 would not be paid - putting the Clubs future in jeopardy.

A statement of affairs had been prepared showing that creditors were owed £6million.

Krasner was able to confirm that two written bids had been received, and was expecting a 3rd to be submitted by email. The two written bids would ensure that AFC Bournemouth will not go in to liquidation. As a result, there would be enough cash to get the Club through to the end of the season and no player sales would be required. This news was greeted with a round of applause.

Under Football League rules, the footballing creditors (players and clubs) MUST be paid in full. This currently totals an approximate figure of £325,000, and is in preference to every other creditor who is subject to the CVA being agreed, hence why Inland Revenue/Customs and Excise is to vote against CVAs where Football Clubs are concerned.

The remaining creditors are subject to a CVA (Creditors Voluntary Agreement).

So far Mostyn has paid wages to the tune of £200,000, money the Club owes back to Mostyn. A claim by Stanley Cohen is not recognised by the Administrators as it is not lodged with Companies House.

For the CVA to succeed, 75% of the creditors +£1, must agree to the proposed CVA. With the Inland Revenue/Customs and Excise against, and the Football League abstaining from the vote, the likelihood of the CVA being passed was unlikely.

However, the Administrators Fees would be approved by the Inland Revenue/Customs and Excise!

Then came a short question and answer session.
1. From Bournemouth Borough Council asking about Exit Strategy from Administration.
The response was either through a CVA, or not. If not through a CVA, then the Football Club could be liquidated, go in to compulsory liquidation, or a creditors volutary liquidation.

2. Question relating to Advertising The Club For Sale.
Krasner felt that nothing formal was required given the press coverage at the time the Club went in to Administration, demonstrated by the fact that there were 16 enquiries and 16 phone calls relating to the sale of AFC Bournemouth.

3. From Nick Douch of PlayerShare asking whether a a CVA Creditors Committee be formed?
Krasner responded that it could, but the Club is likely to be sold within the next 20 hours anyway!

4. A question relating to the Sale and Leaseback of the Stadium.
When asked about the 'dubious' nature of the S&L of Dean Court and whether matters should be handed over to the Police to investigate; Krasner responded by saying that he did not know where the S&L money had gone, maybe matters should be handed over to the Police, but it was not the job of the Administrator to investigate and was not prepared to comment. He did say that if creditors wanted to pay for an investigation, then they could do so.

5. Another question from Nick Douch, this time asking about the transfer of the Football League Share and if it was automatic.
Krasner stated that of the 32 Administrations that have taken place, there had been 32 transfers of the FL Share. But the imcoming regime would have to pass a "fit and proper persons" test.

6. Dave Stone asked about why the Football League were abstaining.
The response to this was simple ....... it is FL policy to abstain as they are in a no-win situation, but it is possible that a review of policy may come in the near future.
A further question was asked about player sales, to which the response was that no players sales were proposed and effectively said that Sam Vokes is a valuable asset and is in the plans of which ever of the new bids is accepted.

7. From a season ticket holder as to why the HMRC vote against CVAs.
Krasner stated that this is politics since they lost out with the original Wimbledon FC club. Plus they didn't see why Football related creditors should be treated with any preference over themselves.

8. Paul Williams asked how many sales packs were sent out.
Krasner responded to say that 7 or 8 sales packs had been sent out.

9. Nick Douch asked about whether we were to learn more of the two new bids before the CVA vote.
Krasner responded simply by saying no!

Moving on to the two witten bids ........
Krasner confirmed that the difference between them was marginal and was planning to get both parties together to gain some clarification and to set down some rules. Both parties would have to make a deposit of £100,000 with the unsuccessful bid having their money returned, with interest.

Both bids could be better than the previous non-CVA. Krasner would run the CLub until such time that the Football League Share was transferred back to AFC Bournemouth.

By 12-noon on Tuesday 8th April, an amended bid would be accepted.

Future season ticket sales would start next week with monies ring fenced in a separate account and not released to the Club until such time as the Football League Share was transferred back to the Club.

At the time of the meeting, both of the new bidders did not know who the other was, but would probably do so now!

BBC Radio Solent asked at this point whether Harry Redknapp was coming to the rescue, to which Krasner responded by saying that he had not spoken to Redknapp, was already involved with Portsmouth and could not get involved with AFC Bournemouth.

When asked whether both bidders could work together, this was though to be highly unlikely, which gave rise to speculation that the bidders were Mostyn/Sly on the one hand and Marc Jackson.

At this point, the meeting was adjourned for a short recess to allow PlayerShare to consider its' position given the new information that was available regarding the new bids. PlayerShare decided to reverse it's AGM decision and to support the Administration Proposals and the CVA.

The Administration Proposals were APPROVED. There were two voters going against the Adminstration proposals.

The Administration meeting was adjourned to allow the CVA Meeting to commence. Although the original CVA no longer applies, both of the new bids matched the proposed 10.2p in the £ payment. With HMRC voting against, and the Football League abstaining, the new CVA was rejected. Two others also rejected the proposed CVA.

The overall outcome is that the Club can now be sold by Krasner for the best possible price even though a CVA has been rejected. This could also mean a further points penalty being imposed by the Football League as their current Insolvency Rules have been broken. No decision on this can be made until such time as the case involving Leeds United has been resolved.

The meeting was then closed.