NC files for protection under Bankruptcy Act; TTFA will consider selling Home of Football

“[…] This process, as it was designed, will allow the TTFA to manage its operations and provide a stay from all legal proceedings and creditor actions for a period of up to six months.

“[…] At this stage, all options are on the table; the sale of the Home of Football is definitely an option…”

The following is a press statement from the Fifa-appointed normalisation committee, which is headed by businessman Robert Hadad and runs the operations of the Trinidad and Tobago Football Association (TTFA) at present:

The Fifa-appointed normalisation committee (NC) of the Trinidad and Tobago Football Association (TTFA) has moved one step closer to developing an implementable plan to address the TTFA’s long-term debt.

An Ernst & Young report, dated 9 April 2021, put the TTFA’s total outstanding liabilities and unasserted claims (contingent liabilities) at approximately TT$98.5 mil.

The NC today (Monday 8 November 2021) notified the supervisor of insolvency of its intent to make a proposal under the Bankruptcy and Insolvency Act of Trinidad and Tobago, which will enable a structured approach to the restructuring of the TTFA and the preparation of a fair, transparent and acceptable payment proposal to address the TTFA’s debt.

This process, as it was designed, will allow the TTFA to manage its operations and provide a stay from all legal proceedings and creditor actions for a period of up to six months, thereby securing the TTFA’s assets while the management and NC work, under the oversight of the independent Trustee, to develop and present a proposal to address the TTFA’s debt to all creditors.

The NC has appointed Maria Daniel, a licensed trustee, to manage the debt proposal process, which will be guided by the rules of the Bankruptcy and Insolvency Act, Chapter 9:70. The process will include meetings with and the submission of claims (and supporting documents) by all creditors; a review and verification of the claims; and the development of a proposal to deal with the valid outstanding liabilities.

Once the proposal has been developed and approved by the creditors, it will be sanctioned by the courts and the NC will proceed to implement the proposal in accordance with its terms. During the development of the proposal and its implementation, the NC’s day-to-day management of the TTFA will be unaffected.

Commenting on the decision to seek protection under the Bankruptcy and Insolvency Act, NC chairman Robert Hadad said: ‘The TTFA is currently hamstrung with debt, and we can’t allow past mismanagement and poor governance to cripple the future of football or indeed its daily operations. 

‘This option, under the supervision of the supervisor of insolvency, the trustee and the courts, ensures transparency, equity and independence in the process while, at the same time, ensuring that our current subventions are used for the day-to-day running of the TTFA and its present and future needs. 

‘The intent is to rehabilitate as opposed to dissolve the TTFA with a view to preserving continuity and the development of football in Trinidad and Tobago for future generations.’

Background:

On 17 March 2020, the international governing body for football, the Fédération International de Football Association (FIFA), announced the Bureau of FIFA Council’s decision to appoint a normalisation committee (NC), in accordance with Art. 8 Par. 2 of the FIFA Statutes. 

The mandate given to the NC included:

1. Run the TTFA’s daily affairs
2. Establish a debt repayment plan that is implementable by the TTFA
3. Review and amend the TTFA Statutes (and other regulations where necessary) and to ensure their compliance with the FIFA Statutes and requirements before duly submitting them for approval to the TTFA Congress; and 
4. Organise and conduct elections of a new TTFA executive committee for a four-year mandate.  

FIFA appointed Mr Robert Hadad (chairperson), Ms Judy Daniel (deputy chairperson), Mr Nigel L Romano (member) and Mr Trevor Nicholas Gomez (member) to serve as members of the normalisation committee (NC). One additional committee member can be appointed.

The NC’s tenure, which includes acting as an electoral committee ‘as none of these members will be eligible for any of the open positions in the TTFA elections under any circumstances’, expires upon the execution of their mandate ‘but no later than 24 months after its members have been official appointed by FIFA’ 

Q&A

TTFA Media: Has the normalisation committee filed for bankruptcy? Is the TTFA now bankrupt?

Hadad: No. The normalisation committee has neither filed for bankruptcy nor has the TTFA been put into bankruptcy. The Bankruptcy and Insolvency Act of Trinidad and Tobago provides an avenue for individuals or organisations in financial difficulty to seek the protection of the courts from litigation while they develop a payment proposal and negotiate with creditors to settle outstanding debt through a court supervised process that is fair, transparent, and equitable.

What happens to the individuals or organisations that have made successful claims against the TTFA in court?

A stay of all such proceedings was automatically triggered by the filing of the Notice of Intent on 8 November 2021. This, in effect, will ensure that all creditors are treated equitably in the settlement of the TTFA’s debt.  

Given the $98 million debt, how does the NC/ TTFA plan to continue funding the running of football?

Filing the Notice of Intent to develop a payment proposal for creditors under the Bankruptcy and Insolvency Act gives the TTFA the protection of the courts from claims on its current and future income—the TTFA’s existing assets will be used to deal with the existing debt.  The day-to-day operations of the TTFA and future football activity will be funded with subventions from Fifa in the first instance.

What is the total value of the TTFA’s assets?

An independent third-party valuation is to be conducted to determine that figure.

Will the Home of Football be sold?

At this stage, all options are on the table; the sale of the Home of Football is definitely an option.

When will creditors be paid?

Acting under the supervision of the court, and guided by the Bankruptcy and Insolvency Act, 2007, the TTFA has to develop a repayment proposal under the oversight of the Independent Trustee and get the approval of the creditors in a period of up to six months.

The process will include meetings with and the submission of claims (and supporting documents) by all creditors; a review and verification of the claims; and the development of an approved repayment proposal to deal with all valid outstanding liabilities. Following this, a timeline will be agreed for payment to creditors.

Will creditors be paid in full?

The repayment proposal will be determined by the funding available to pay creditors, and will be made after all claims have been reviewed and verified by the independent trustee and those verified claims weighed against the TTFA’s ability to pay.

Is the NC taking this action so that it can extend its term beyond March 2022?

The tenure of the NC is wholly in the hands of FIFA. The decision to file a Notice of Intent to develop a repayment proposal for the TTFA’s creditors was taken because it is a court supervised process that ensures transparency, equity and independence while, at the same time, ensuring that the TTFA’s current subventions are used for the day-to-day running of the TTFA and its present and future needs.

How has the Association accumulated $98.5 million in debt and unasserted claims? Over how many years has this debt been accumulating? Who was responsible for this mismanagement over these years?

Decades of poor governance and a lack of proper internal controls characterised the operations of successive TTFA administrations and is the root cause for poor financial health and overall operational performance of the TTFA.

Has the Association accumulated additional debt since the NC was appointed?

No. During the past 12 months the NC has focused on improving the systems of governance and controls and has implemented several operational improvements, including the preparation of monthly management accounts; the introduction of improved compliance processes and procedures; enhanced systems and accounting software; and reviews by EY, Fifa and Concacaf. The NC is in the process of implementing EY’s recommendations for new policies and procedures, use of technology and improved governance.

I know you indicated that the value of the accumulated debt and unasserted claims of the Association as at April 2021 is $98.5 million but what is the value of the Association’s assets?

An independent third-party valuation is to be conducted to determine that figure.

Why did the Association not seek funding relief from Fifa and GORTT to repay the debts of the Association?

Neither Fifa nor the GORTT has any legal obligation to repay debt accumulated by the TTFA as a result of mismanagement and poor governance.

The matter of contingent liabilities as at April 2021, what is the value of these liabilities, to whom are they due, and for what? Are these liabilities likely to crystallise and will they form part of the liabilities that the Association will have to settle?

The licensed trustee will meet with all creditors to ascertain the validity of each claim and make a final determination.

Why did the Association not simply take a loan from a bank or other lending institution equivalent to the liability and pay off its creditors?

With its accumulated debt and track record of poor management and governance, the TTFA would not qualify for a loan of the size necessary to settle its debt. 

The NC has the responsibility, under their mandate, to develop a debt repayment plan. Why are they passing off their responsibilities assigned by Fifa to a Trustee?

By appointing an independent trustee under the Bankruptcy and Insolvency Act, the NC is ensuring that the process for developing a repayment proposal, under the supervision of the court, would be fair, transparent and have the approval of the TTFA’s creditors. The appointment of a trustee is a requirement of the Bankruptcy and Insolvency Act.

It is said that the Association has assets which include the Home of Football and acres of land valued at approximately $75 million. Surely the Association can use these assets to settle its creditors!

An independent third-party valuation is still to be conducted to determine the value of the TTFA’s assets.

Is TTFA being dissolved?

No, the TTFA is not being dissolved; the organisation will continue to operate normally under the supervision of the NC while the trustee meets with creditors to validate their claims and develops a payment proposal to settle the TTFA’s outstanding debt. This process will allow the NC to build the foundation for the rehabilitation of the TTFA.

Have other options to this approach been considered by the TTFA?

Several options were considered and reviewed with our consultants EY and this was determined to be the best and most viable; the TTFA’s assets are protected while a fair and transparent repayment plan for the TTFA’s creditors is developed with the oversight of an independent trustee and the administration of football continues without interruption.

Can the TTFA enter into new contracts during this process?

Yes, the TTFA will continue to operate normally, under the supervision of the NC.