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The cost of the CVA
It is five years since the CVA (Company Voluntary Arrangement) was set up at Hereford United. In that time the cost of the arrangement has probably come to more money than the amount left to be paid to unsecured creditors.
The first year of the CVA saw over £49,000 paid out. The supervisors fees and expenses came to £31,752 and legal fees were £9,848. VAT was another £7,280. However, no money was paid out to creditors in that year.
The second year (1999) was when the main payments to creditors took place. Some £129,744 was paid to the Inland Revenue, £44,617 to the Customs and Excise, and some Trade and Expense creditors were paid £41,063. On top of this the supervisors received £11,410 and other costs came to £908. There was another £2,062 for VAT.
More payments were made in 2000. Trade and Expense Creditors were paid £46,081, and the Supervisor received another £1,036.
According to the report for 2001 no payments were made and it is understood that no payments were made last year (2002). The documentation for 2002 is due to be published within the next three months. It is expected that the supervisor will require some payment for his work probably around £1,000 per annum.
The costs of the CVA for the first five years have come to £64,979. When the CVA is completed there will be more costs for finalisation. The final bill for the CVA could come to nearly as much as the unsecured creditors were owed.
Some of the extra costs may have gone on a modification of the CVA which it is beleived happened as a result of the joint venture with Formsole. It is thought that the CVA can continue for up to ten years and if the joint venture is successful then the creditors will be paid in full. However if the venture fails then the creditors could get nothing. This information came from a source close to the Supervisor but has not been confirmed by the club.
One thing is certain, Peter Hill and his fellow directors at the time could not have tried very hard to do a deal with the unsecured creditors. Swansea City managed to agree only to pay 10p in the pound recently when they got into trouble, so why did Hereford agree to 100p in the pound?
As Graham Turner told a supporters meeting last autumn (see HU-FC.co.uk reports dated August 13th) that he hoped to make a payment to creditors this season and he said there was about £25,000 left to pay, it looks as though the club is aiming to honour its debts whatever the future.
It is to be hoped that £25,000 is all that is owed.