INSIDE TRACK: This time Pompey really only have 20 days' to live...
By Inside Track
Wednesday 01 Feb 2012 09:45:00
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Remember these words?

"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'm 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's not a consideration that I strictly take into account."

Of course, they're the words of Registrar Christine Derrett in February 2010 as the old Portsmouth City FC company struggled for its financial life.

Fast forward two years and its deja vu, with a February 20 date set for the son of PCFC, Portsmouth Football Club (2010) Ltd, to have its day in court, fighting a rearguard action once again against a winding up petition by HMRC.

The sums of money involved may be less astronomical - this time the club owes a mere £1.6m against telephone number VAT and PAYE & NI contributions in 2010 - but the question remains the same: can PFC prove it is solvent? If not, is there any imminent prospect of the company being sold to a new investor?

By the skin of its teeth, Pompey got away with it two years' ago. Can they be so lucky again?

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Those who are concerned about administration probably don't need to worry about it. Following the issuing of the winding up order by HMRC, Pompey have to get the court's permission to go into administration. If you check out the quotes above, you will understand how lucky we were to get into administration last time.

This time we have a major problem. Our debts are just getting bigger and there is no realistic plan to become solvent. An administrator cannot allow a business to run while insolvent so before the court allows a business to seek this protection from it's creditors it will expect to see the cavalry not just coming over the horizon, but charging into the battle.

There is no question that Pompey are insolvent and the only plan to become solvent is to find a new owner willing to inject the funds CSI are no longer around to do.

The court will ask the question of whether after four months without finding a buyer for Pompey there is a realistic chance of finding one. They are unlikely to accept the sort of dubious letters expressing an interest that they did last time. There is no-one around to even pay the administrator this time. Despite the rhetoric about Chainrai guaranteeing £10m to put us through administration we got through it last time by drawing down parachute payments, and in the High Court the administrators barrister quite clearly said this was done because there was no other source of funding available. Who will pick up the cost this time?

Many fans have spoken of Chainrai and Kushnir stepping back in. There are many problems with that scenario, but it has to be a remote possibility anyway. Portpin are already rumoured to be ready to accept half of their previous price with no takers. For them to start putting in £4m between now and the end of the season in the hope of recouping £8m is just throwing good money after bad. Many people refer to their secured status but that is no longer relevant. If a bank lends you £1m to buy a house then discovers when they repossess it that it is in fact worth 50% of that the net result is that they have lost 50% of their money. There is no 'secured debt fairy' who compensates people for making bad investments.

If Portpin were to undertake to keep the club running until the end of the season they would know that all the money they invest would be dead money. If after nearly three years Portpin have failed to find a new owner willing to give them back £17m then the chances of them finding someone willing to pay £21m is an LSD-inspired daydream. Pompey have probably left them at the point where it isn't worth chasing their losses any more.

The prospect of winding up also explains the lack of significant movement outwards in the window. There is no point selling players unless the £2.4m needed to discharge the winding up order, (£1.6m already cited and once wages are paid another £800k apparently becomes due to HMRC), can be raised. As you tend to get 50% of any fee up front and the rest in instalments the chances of Pompey raising that kind of money are remote to say the least. Better to keep players who will attract a new owner and could potentially be sold for good fees in the summer to fund his squad rebuilding efforts.

But this time the football club fairy godmother may well baulk at bailing out PFC once more. As things stand, it is a pretty good bet that Pompey will not survive the hearing, if it gets that far, in a little under three weeks' time.

Lampitt and Andronikou are obviously not going to appear in The News telling us we are doomed, largely because it is their job to try and sell/save the club. They won't concede defeat to HMRC before even arriving at the courtroom steps. They will exhaust every legal avenue but it looks a doomed effort.

Pompey, in its current guise has but 20 days left to live. Without a new owner we are going to be into Plan B country. Never ask for whom the bells chime; this time they chime for us.

 
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