By Nick Harris
10 February 2010
Fears that Portsmouth would today become the first Premier League club ever to enter administration while being an active member of English football’s elite have abated, just slightly, after they were given a seven-day stay of execution by the High Court to sort out their financial affairs.
The club’s chief executive, Peter Storrie, says he remains hopeful that Pompey can find a new owner to address the club’s chronic money problems. The Premier League’s bottom-placed club owe around £60m and have had four owners this season alone as they have lurched from crisis to crisis, on and off the pitch.
Portsmouth faced a winding-up petition, brought by Her Majesty’s Revenue & Customs (HMRC) in the High Court today, over an unpaid tax bill of £7.5m. The club also owes £4.7m in unpaid PAYE and National Insurance contributions. The club’s main creditor is a former owner, Alexandre “Sacha” Gaydamak, who controlled Pompey between early 2006 and last year. Gaydamak is owed around £33.5m in total.
Gaydamak sold the club to a Dubai-based businessman, Sulaiman Al-Fahim, who then sold to Saudi Arabia’s Ali Al Faraj, whose former 90 per cent shareholding now resides with Hong Kong-based businessman Balram Chainrai, as a result of Chainrai lending £17m to keep Portsmouth afloat recently.
At today’s High Court hearing, Gregory Mitchell, QC, acting for HMRC, said: “It’s quite clear beyond any doubt at all that this company is insolvent. They have failed to provide any evidence at all as to their solvency. There are many debts and they are unpaid.”
The judge in the case, court registrar Christine Derrett, said: “I am very concerned about the financial status of this company. It seems to me there’s a very real risk that this company is undoubtedly trading while it is insolvent. I am obviously conscious that by making a winding-up order it would have very severe consequences not only for the company as a business but for the supporters themselves but that is not a consideration that I strictly take into account.”
Nigel Hood, acting for the club, told the court that there are two interested buyers for Portsmouth. It is on the basis of this claimed interest that a stay of execution has been granted. Chainrai has no interest in long-term ownership and wants to sell. Hood said: “There would be irreparable harm caused to the employees, 600 staff, suppliers, people who have paid in advance for their season tickets who would lose their money.”
The case will next be heard on an unspecified date after 19 February.
Mrs Derrett has had prior experience of dealing with winding-up applications involving football clubs; in November she granted Cardiff City 70 days to fight a HMRC winding-up order, and yesterday she also gave both Cardiff (of the Championship) and Southend (of League One) 28 days each to try to find solutions to winding-up orders. Mrs Derrett has also granted extra time to Notts County and Chester in recent weeks to sort out their own troubled finances.