Extreme Football Forum  |  Football Forums  |  NPower Championship  |  Topic: Portsmouth to discover fate at High Court hearing

bbc sports

Portsmouth officials are back in the High Court on Tuesday for a hearing that could decide the club's future.

Pompey, who were relegated to the Championship in May, are striving to come out of administration.

HM Revenue & Customs, which says it is owed £13m more than the club's £24m figure, has lodged an appeal against a proposed deal for creditors.

If the appeal is successful, Pompey could face further financial turmoil and a fresh points penalty.

HMRC is challenging the situation where football creditors, such as wealthy clubs and players, are given preference and up to 100% of monies owed while smaller creditors only receive a fraction of what they are due.

And it claims it is owed £37m to take into account image rights paid to players in offshore accounts.

BBC Radio 5 live sports news correspondent Gordon Farquhar said High Court judge Mr Justice Mann would have to decide whether the HMRC's 'blocking action' was justified.
"The Revenue's argument is that they're owed £13m more by the club than Portsmouth calculate," he said.

"They're also unhappy that they're not among the preferred creditors because league rules say only football creditors have to be paid in full.

"HMRC are challenging that, and the 20 pence in the pound they have been offered along with the other non-football creditors, who voted for the creditors' agreement.

"HMRC believe the tax-efficient way clubs have developed of compensating players for their image rights has also been abused and much now depends on how the judge sees things over the next two days in court."

In February debt-ridden Portsmouth became the first Premier League club to enter administration. They were docked nine points.

Administrators later revealed Pompey owed about £120m and a plan was proposed in June to repay unsecured creditors at least 20p in the pound over five years.

But HMRC is appealing against this Company Voluntary Agreement (CVA). The hearing to settle the issue could last up to two days.

For a CVA to be agreed, it must win the support of those owed at least 75% of the unsecured debt. On 17 June the proposed agreement garnered 81.3% of the vote.

But HMRC has argued that £13m of debt was left out of the original calculations.

If the £13m figure is included, HMRC said it would then have more than the 25% of the debt it needs to block the CVA.

I say dock them the points, it has happened to others, and it seems the FA are bending over backwards to help Pompey out 

 

bbc sports

Portsmouth could go out of business if they lose their court case against the tax authorities on Thursday, according to the club's lawyer.

Her Majesty's Revenue and Customs says it is owed £13m more than the £24m claimed by Portsmouth's administrators.

Richard Sheldon QC says that if HMRC wins, the club will "not be able to give the Football League the assurances it needs to fulfil its fixtures".

"It will go out of the league. The club will probably be liquidated," he added.

High Court judge Mr Justice Mann, who is overseeing the tax liability case, will hand down his decision between 1500 BST and 1600 BST on Thursday.

Portsmouth's lawyer, Sheldon, added that if the club loses the case then it would prevent former owner Balram Chainrai, who put the club into administration in February, buying it for a second time.

Sheldon added: "If the club is not sold it will clearly be relegated out of the Football League.

"The administrators cannot give the assurances needed that this season's fixtures can be completed.

"It will then go out of the Football League and into some distant league, but the reality is that it will probably go into liquidation because the administrators will not be able to fund the continued business."
Earlier on Wednesday Sheldon claimed that Premier League clubs wanted Portsmouth to go bust last season when the full extent of their financial problems emerged.

Sheldon told the court that it was only the intervention of Premier League chief Richard Scudamore that saved the club.

The other clubs wanted "to boot Pompey out there and then", Sheldon said.

He added: "The clubs wanted Portsmouth to go to the wall and divide all the TV money among themselves."

That prospect was avoided, however, when Scudamore persuaded the clubs to give Pompey an early parachute payment, allowing them to complete the season.

Portsmouth, who remain in administration, were docked nine points for becoming the first Premier League club to go into administration and were duly relegated at the end of the season.

Portsmouth win High Court fight against tax authorities

http://news.bbc.co.uk/sport1/hi/football/teams/p/portsmouth/8886009.stm

Portsmouth are free to begin the new Championship season after a challenge to their Company Voluntary Agreement by HM Revenue & Customs failed.

HMRC had wanted the agreement blocked, arguing that it unfairly favoured football creditors over others.

The proposed CVA will give Pompey's administrators time to try to settle the club's debts and find new owners.

HMRC, which claims it is owed £37m in total by Portsmouth, said it was "disappointed" but would not appeal.

Pompey's lawyers had stated that the club faced extinction if it lost the case, which was fast-tracked through the courts to get it resolved ahead of the 2010-11 Football League campaign, which starts on Saturday for the men from Fratton Park with a trip to Coventry.

HMRC's lawyer Gregory Mitchell QC said the way the club's CVA favoured football-based creditors - including players, who could recover 100% of money owed - over others, such as HMRC itself, meant "one class scoops the pool and the rest are left out in the cold."

After Mr Justice Mann dismissed its application, HMRC said in a statement: "We are naturally disappointed... and we can confirm that we do not intend to appeal.

"Our aim when pursuing debt of any kind is to achieve a fair outcome for the taxpayer and we will take this forward in the wider context of the football industry through separate and outstanding legal proceedings over the status of the so-called "Football Creditors Rule".

Portsmouth chief executive David Lampitt said the club was "still under fairly significant financial constraints" but they could at least start to look towards the future.

"The transfer embargo is not lifted straight away and we're not out of administration fully yet but obviously it makes our discussions with the Football League and the Premier League hopefully a little bit easier, puts us on a better footing."

He added: "There's no magic wand anyone can wave. There's a lot to be sorted out but we need to keep winning the battles put in front of us - hopefully today is a good demonstration of that."

Previous owner Balram Chainrai is now in talks with Portsmouth's administrators about buying the club and is "the only one in the frame", according to his spokesman.

Chainrai was one of Pompey's four different owners during the 2009-10 campaign as the club became the first in Premier League history to enter administration.

They were docked nine points as a result under Premier League rules, contributing to their relegation with total debts of approximately £130m.

Hong Kong-based businessman Chainrai took control of the club after the previous majority shareholder defaulted on money owed to him.

At the time, it was understood he had taken over on a temporary basis until a new buyer could be found, but it now seems he may have a longer-term strategy for the Fratton Park outfit.

"A way has been found to go forward and he is finalising terms with the administrators," claimed Chainrai's lawyer Ashok Patel.

"Mr Chainrai [is] very happy because it opens the way for the only realistic solution, which is for his company to purchase the club and stabilise the club and to continue in the Championship."

Former Portsmouth player Steve Claridge told BBC Sport the club had had a lucky escape and anyone finding themselves in a similar situation in the future would know what to expect from the taxman.

"The tax people have laid down a marker, they've said 'enough's enough - next time this happens we'll go after anyone to the nth degree and we'll put you out of business if you abuse the system'," he said.

"Even in the realms of Portsmouth there were some people saying the club had got its just desserts. No-one wants to see it go out of business, but this is a reminder you can't run a club with money you don't have."

 

It just seems to me that Pompey got every bit of help they needed. I mean how could they hope to survive with the amount of money they were paying for players and paying out in wages each week, and only getting gates of under 20,000 

 

Blimey, this has been going on even longer than the Fabregas>Barca? story.

Hopefully, Pompey have learned their lesson and will behave financially from now on, even if they have to sell assets to survive.