After months of uncertainty, that was the outcome yesterday when administrators BDO secured a Company Voluntary Arrangement (CVA) with Dunfermline’s creditors. The football club and the ground were owned by separate companies, but the creditors agreed that they should be joined together under new ownership – Pars United, the supporters’ group which has campaigned tirelessly to keep the club alive.
Creditors now have a 28-day period in which to appeal against the decision, but that is expected to be no more than a formality. The CVA was passed thanks primarily to the agreement of Lloyds Banking Group, which had been owed several million pounds. Gavin Masterton, the second largest creditor, abstained from the vote, knowing it would have the required 75 per cent of voting shareholders to go through.
Those two and other smaller creditors will get no return on the money they are owed, but the new owners will still have to meet the club’s footballing debt of more than £100,000.
“We thank each and every creditor who voted for this outcome,” Bob Garmory of Pars United said. “We know that many have suffered greatly from the financial problems of the football club. We now pay tribute to them.
“This vote will allow Dunfermline Athletic to begin a rebuilding process under a wide spread of supporter ownership.
“We must also thank every fan of Dunfermline for their patience and support and everyone who has helped us by freely giving us the benefit of their time and experience. It is very much appreciated.
“Hundreds of families in west Fife, and around the world, have given significant financial and personal support to save a club whose history is very dear to their hearts. We are very much aware that there is still a tremendous amount of work to be done if the damage which the club has suffered in recent times is to be repaired. The fundraising effort of the Pars fans to date has been nothing short of exceptional, particularly in such tough economic times.
“However, it is important to stress to supporters the need for all types of fundraising to continue. Even when the club comes out of administration, it will not be ‘debt free’, and a number of further issues will require to be addressed by Pars United, at a cost, as a matter of urgency to ensure the long-term sustainability of our football club. Therefore, now that there is, at last, clarity about the future ownership of club and ground we urge more supporters to step forward in even greater numbers.”
Bryan Jackson of BDO, who are also administrators of Hearts, explained the process by which the CVA was reached. “The ground itself was owned by East End Park Limited, so that’s one entity,” he said. “And you have got all the creditors of Dunfermline Athletic Football Club.
“So what happened was Pars United made an offer for the ground, and made an offer for our CVA. Both were subject to each other. There would be no point getting the ground if you don’t have the club, and there would be no point getting the club without a CVA being approved because of all the debt.
“Now the CVA has been approved, once the 28 days for lodging objections runs out, Pars United can go on and conclude the agreement for the ground which is already in place. That will then put them in control of the stadium and I will transfer the shares of Dunfermline to them. They will have to meet the football debts in full, which are £170,000 – that’s a mixture of football clubs and players. The other debt, apart from the preferential creditors, is 0p in the pound to the ordinary creditors. Their debt was in the region of £10m. The preferential creditors will get an estimated £65-70,000.
“It was only as things started unfolding that we saw the extent of the debt. The East End Park Ltd debt was probably a base £5-6m, but then you had arrears of rent and then future estimated rent and all kinds of things.”
Jackson went on to explain that it was only because of the emotional attachment of so many people to the club that it had been able to extricate itself from such an apparently intractable position. “I am very relieved, because we did inherit a really difficult situation. If you go back to day one, we had a month’s arrears of wages we couldn’t pay.
“We had literally no money.Pars United helped me out by giving me financial support to keep the doors open.
“We didn’t have any players to sell; we didn’t really have anywhere to go. And I always thought how would we have anything to offer to creditors?
“So with all those obstacles yes, it did look quite grim at that point. But because it was a football club I said on day one it was 50/50 and that’s what I always felt. If it wasn’t a football club you would never have given it a chance.
“But everyone pulled together as expected. The fans came good. The bucket collections were huge and they kept the doors open. All the money went to keeping the club open and on player wages. We stated at the time that none of that money would be utilised for fees and none of it has. And I think giving that assurance really helped.”
BDO will remain involved for some time after the appeals period, in order to help assure a smooth transition to new ownership. But essentially, their job is done, and Dunfermline can begin the task of looking after itself again, albeit in straitened circumstances.
“Unfortunately the cashflow even right now for the next three or four weeks is going to be really tight,” Jackson added. “But once all that money is written off the balance sheet and you are just left with the football debt then the club has an opportunity to rebuild. So I suppose realistically we may well be here in some capacity for the next ten weeks. But I would like to think our involvement will decrease as the weeks go by until we are out the door.”