Dundee FC have had their proposals for a company voluntary arrangement accepted by club's creditors today. 81 percent of creditors (by value) have accepted six pence in the pound of money owed despite HM Revenue and Customs being owed at least £420,000 in outstanding tax bills.
Administration followed by a CVA goes some way to exit the whole insolvency process.
Basically, the administrators hand back control of the company to the directors. This can be an expensive process and there is no reason why a CVA could not be done from the outset. As we have said before CVA's are scandalously under used in Scotland especially considering they allow the company to continue to trade and save jobs.
The club admitted that if the CVA had not been approved then the club would have been put into liquidation.
The difficulties for the club are not over as they have to stick to the discipline and payments agreed in the CVA to ensure that it does not fail. As such, lets hope that the CVA is attainable. The dividend at 6p in the pound is low but this follows the administration. CVAs often obtain between 40p and 60p in the pound.