Post by QPR Report on Feb 24, 2010 7:12:36 GMT
Guardian/James Jackson
Portsmouth administration may trigger 20-point deduction next season• Chainrai admits club is likely to enter administration on Friday
• Deal with creditors needed to avoid further points deduction
Portsmouth will almost certainly become the first Premier League club to enter administration on Friday in a move that would effectively condemn them to relegation. It could also result in the club starting next season in the Championship with a further reduction of up to 20 points.
Entering administration will result in an automatic nine-point penalty from the Premier League, leaving Portsmouth 17 points adrift of safety. But the punishment from the Football League next season is likely to be far harsher.
Portsmouth would only avoid a further points deduction from the Football League if the administrator can reach a company voluntary arrangement, a deal with creditors to accept only a proportion of the club's debts.
That will be extremely hard to achieve, however, because league rules state that football creditors must be paid in full and Her Majesty's Revenue and Customs will insist on the same. Portsmouth must find at least £22m to settle with them alone. Some £10m is outstanding in unpaid transfer fees, including for their former midfielder Sulley Muntari, signed from Udinese and now with Internazionale, and at least £12.1m is owed to HMRC.
There have been four previous cases of Football League clubs failing to reach CVAs, involving Leeds United, Rotherham, Bournemouth and Luton Town, and they were handed penalties of 15, 17, 17 and 20 points respectively.
That raises the prospect of Portsmouth suffering consecutive relegations and dropping into League One. But administration has emerged as the most attractive option for Portsmouth because it would lead to the suspension of the winding-up petition served by HMRC, which is due to be heard in the high court on Monday, and ensure the club can continue. Portsmouth confirmed in a statement that administration is highly likely.
"Businessman Balram Chainrai, the owner of Portsmouth Football Club, has today served notice that the club will go into administration unless new owners can be found by Friday," the club said.
"Mr Chainrai and fellow investors from his Portpin investment vehicle are in London to continue talks with representatives of four different groups interested in buying the club, but have had to reluctantly accept that it is now unlikely a deal can be done before a winding-up hearing, due to be heard in the high court on Monday."
Phil Hall, a spokesman for Chainrai, pledged that the owner would fund any administration from his "own pocket". He said: "Mr Chainrai has agreed to continue funding the club going forward until its long-term future is decided. He will also pay for the administration process out of his own pocket. There is now only a short window of opportunity for buyers to come in with a credible offer. We have to be realistic and having the club wound up is not an option as far as we are concerned."
Chainrai is among the club's creditors. He is due £17m, which he injected to help the previous owner, Ali al-Faraj. Another of the club's former owners, Sacha Gaydamak, is owed £30.5m. Whether they press for complete repayment may be academic in Portsmouth's fight to avoid a points deduction next season given the need to settle in full with football creditors and the taxman.
The club may potentially be allowed by the Premier League to sell players while in administration, outside the transfer window. "Administration would mean the club re-emerging as a healthy financial entity," Hall said. "The club would then become an attractive proposition for a potential buyer who could invest new funds in rebuilding the club's future.
"We would like to ask the fans, the staff and management of Portsmouth Football Club for their support and patience should this step be taken, as they believe it is the only route left open to them. The serving of this notice means the winding-up order is automatically suspended. It means the club is safe, it can fulfil its fixtures and as far as is possible, it is business as usual."
www.guardian.co.uk/football/2010/feb/23/portsmouth-administration-points-deduction
Portsmouth administration may trigger 20-point deduction next season• Chainrai admits club is likely to enter administration on Friday
• Deal with creditors needed to avoid further points deduction
Portsmouth will almost certainly become the first Premier League club to enter administration on Friday in a move that would effectively condemn them to relegation. It could also result in the club starting next season in the Championship with a further reduction of up to 20 points.
Entering administration will result in an automatic nine-point penalty from the Premier League, leaving Portsmouth 17 points adrift of safety. But the punishment from the Football League next season is likely to be far harsher.
Portsmouth would only avoid a further points deduction from the Football League if the administrator can reach a company voluntary arrangement, a deal with creditors to accept only a proportion of the club's debts.
That will be extremely hard to achieve, however, because league rules state that football creditors must be paid in full and Her Majesty's Revenue and Customs will insist on the same. Portsmouth must find at least £22m to settle with them alone. Some £10m is outstanding in unpaid transfer fees, including for their former midfielder Sulley Muntari, signed from Udinese and now with Internazionale, and at least £12.1m is owed to HMRC.
There have been four previous cases of Football League clubs failing to reach CVAs, involving Leeds United, Rotherham, Bournemouth and Luton Town, and they were handed penalties of 15, 17, 17 and 20 points respectively.
That raises the prospect of Portsmouth suffering consecutive relegations and dropping into League One. But administration has emerged as the most attractive option for Portsmouth because it would lead to the suspension of the winding-up petition served by HMRC, which is due to be heard in the high court on Monday, and ensure the club can continue. Portsmouth confirmed in a statement that administration is highly likely.
"Businessman Balram Chainrai, the owner of Portsmouth Football Club, has today served notice that the club will go into administration unless new owners can be found by Friday," the club said.
"Mr Chainrai and fellow investors from his Portpin investment vehicle are in London to continue talks with representatives of four different groups interested in buying the club, but have had to reluctantly accept that it is now unlikely a deal can be done before a winding-up hearing, due to be heard in the high court on Monday."
Phil Hall, a spokesman for Chainrai, pledged that the owner would fund any administration from his "own pocket". He said: "Mr Chainrai has agreed to continue funding the club going forward until its long-term future is decided. He will also pay for the administration process out of his own pocket. There is now only a short window of opportunity for buyers to come in with a credible offer. We have to be realistic and having the club wound up is not an option as far as we are concerned."
Chainrai is among the club's creditors. He is due £17m, which he injected to help the previous owner, Ali al-Faraj. Another of the club's former owners, Sacha Gaydamak, is owed £30.5m. Whether they press for complete repayment may be academic in Portsmouth's fight to avoid a points deduction next season given the need to settle in full with football creditors and the taxman.
The club may potentially be allowed by the Premier League to sell players while in administration, outside the transfer window. "Administration would mean the club re-emerging as a healthy financial entity," Hall said. "The club would then become an attractive proposition for a potential buyer who could invest new funds in rebuilding the club's future.
"We would like to ask the fans, the staff and management of Portsmouth Football Club for their support and patience should this step be taken, as they believe it is the only route left open to them. The serving of this notice means the winding-up order is automatically suspended. It means the club is safe, it can fulfil its fixtures and as far as is possible, it is business as usual."
www.guardian.co.uk/football/2010/feb/23/portsmouth-administration-points-deduction
