Deportivo begins the process of exiting bankruptcy proceedings

2023-11-18 11:53:00

The club wants to agree to a 19.99% reduction and a modification of the agreement that allows it to exit the competition in May 2024

18 nov 2023 . Updated at 11:15 a.m.

In the midst of its financial restructuring process, Deportivo has begun the process of exiting bankruptcy proceedings with a first contact phase to agree on a modification of the current agreement. In the event that this has a sufficient majority and is approved normally, the blue and white entity’s forecast is to be able to affectively his exit from the contest in May 2024.

In parallel to this measure, the club has included in the agenda of the next Shareholders’ Meeting, which will be held on December 19, a proposal to request financing of up to 17 million euros from Abancathe main financial support of the entity, to be able to make the payment of the debt after the modification of the agreement and exit from the bankruptcy.

The club’s proposal is to immediately pay all of its creditors’ debt, both ordinary and subordinate, as soon as a firm resolution is obtained. with a reduction of 19.99%. With the current agreement, they would currently have to wait eight years, until 2031, to collect in the case of ordinary debt, and sixteen more, until 2047, in the case of subordinated debt.

If it obtains sufficient support from its creditors, Deportivo, as stated in its statement, would move the proposal to court in the coming weeks, prior to the Shareholders’ Meeting.

A debt that would be around 160 million euros

During the presentation of the new board of directors of Deportivo, president Álvaro García Diéguez, announced the implementation of a strategic plan with the aim of the entity finalizing the bankruptcy proceedings and addressing its future “with an unbeatable economic-financial environment ». The latest balance sheet, as of June 30, 2022, estimated Deportivo’s bankruptcy debt at 21 million euros, although currently it could be somewhat lower, around 19 million.

The initial debt, according to the bankruptcy administrators, with the approval of the judge, They placed it at around 160 million euros. Of them, 99 corresponded to privileged credits, that is, they were outside the agreement, while 30 were ordinary and 31 subordinated. On these 61, a reduction of 33% was approved, the maximum allowed so that it would not be necessary to open a qualification piece or clarify responsibilities. A percentage that seems ridiculous, compared to most competitions, since Deportivo was only going to save about 20 million euros out of a total of 160, which would later be even less, since 21.7 from the Treasury were considered hard debt. , outside the agreement, so there was no relief on them.

In April 2014, the club made public the agreement reached with the Treasury to pay the privileged debt, which at that time was considered to be 62.2 million. An initial payment of 21.7 million that was seized and two payments per season (with a 50% deferral in case of relegation to Second) were approved. If it was not lowered, it would be paid in January of this year. Otherwise, the deadline would be July 2024. At that time, the nature of the 21.7 million euros that the Tax Agency claimed as privileged debt was in dispute. The Supreme Court agreed with him three years later and what had been reduced to an obligation of 42.4 million (then already reduced after several payments to around thirty) was increased to fifty.

If Deportivo wants to pay the debt early, it has to reach an agreement with all the creditors, since if it does so with some and no, some could feel harmed and denounce that agreement. Thus, the club will try to renegotiate these debts, advancing payment (until 2033 for ordinary debts and until 2050 for subordinate debts) in exchange for the creditors accepting a discount since they will collect in advance the amounts that belong to them. . The normal thing is that the payments are made with a new loan from the largest shareholder who will probably end up capitalizing, thus increasing his already large majority in the club.