Creditors of Dundee FC may receive less than a tenth of what they are owed, the club’s administrator has admitted.
Bryan Jackson said that under a creditors’ voluntary arrangement they may get only between five and 10 pence in the pound to keep the club in existence. If they do not accept that figure the only other option would be to put the club into liquidation.
Mr Jackson was speaking as details were confirmed for those owed money by the cash-strapped club to attend a meeting under the Insolvency Act to consider setting up a creditors’ committee.
The initial creditors meeting will be at Dens Park on Friday, January 7, and those present will be asked if they wish to move forward to a meeting three weeks later to consider entering into a CVA.
It will be at that gathering that Mr Jackson will offer a pence-in-the-pound settlement to those due money from Dundee when the Dark Blues went into administration in October.
It is understood Dundee’s debts now stand at around £2.5 million, about £1m less than the figure previously estimated.
This sum includes “friendly creditors” who have claims for between £1.2 and £1.3m, Her Majesty’s Revenue and Customs who are seeking £420,000, miscellaneous creditors owed around £200,000 and football debt of around £450,000.
Some of these figures may be subject to further negotiation.
The last category has reduced as a result of six of the nine players who were released while under contract when Dundee went into administration finding new clubs, and the remaining sum could go down further if the three other players find new employers.Threat of liquidationAnother mitigating factor has been the reclassification of the substantial funds put into Dundee by benefactor Calum Melville from a loan to a donation, meaning the investment is not repayable.
Coming into the club is £150,000 from the supporters’ society and an estimated £100,000 from the Dark Blues Business Trust.
Mr Jackson said he had received a letter of intent from the trust but did not yet know the precise detail of the sum being offered although he hoped this would be clarified soon.
If the pence-in-the-pound offer is accepted on January 28, Mr Jackson said the club would head out of administration.
Asked the detail of the offer, he said, “I think it is going to be something like five or 10 pence in the pound. In other cases I have been involved with it has been 25 pence in the pound but I don’t think this will be possible here.
“I can only offer what I have got, and this looks like being all I have got at Dundee.”
He added, “If the CVA is not approved, then under normal circumstances the company would have to be put into liquidation.
“It wouldn’t be able to exist.”
Mr Jackson said it was still imperative for the future of the club for fund-raising to continue to achieve the best outcome possible.
The likely pence-in-the-pound settlement is similar to the sum paid to creditors under a CVA the last time Dundee was in administration in 2004.