LONDON, England (Reuters) – Premier League strugglers Portsmouth were given a stay of execution yesterday when the club was granted extra time to fight a winding-up petition.
The south-coast club faced proceedings at London’s High Court over a multimillion-pound unpaid tax bill after talks with the British government’s Revenue and Customs Department (HMRC) failed to produce an agreement.
It now has one week to draw up a statement of its financial affairs and will be back in court on a date after February 19.
Portsmouth, FA Cup winners in 2008, are five points adrift at the bottom of the league and had the club been forced to go into administration the team would have faced a nine-point deduction and almost certain relegation.
They are banned from buying players because of money owed to other clubs, while the players and staff have regularly had their salary payments delayed this season.
Last Thursday, Hong Kong businessman Balram Chainrai became the fourth person to own the club this season after becoming frustrated at not receiving payments on a 17 million pounds ($26.59 million) loan he made to his predecessor.
However, Chainrai said he had no interest in running the club and would offload it as soon as he could find a buyer.
In the meantime, some other creditors who joined the winding-up order have been paid off by the club after extra funds were raised by the sale of defender Younes Kaboul and goalkeeper Asmir Begovic.
UNPAID DEBTS
Portsmouth officials had been negotiating with customs officials for several days but could not reach an agreement before yesterday’s High Court hearing.
It emerged that Portsmouth face a VAT bill of 7.4 million pounds, which the club is disputing, and also 4.7 million pounds in unpaid PAYE (Pay As You Earn) and National Insurance contributions which were not part of yesterday’s petition.
Representing HMRC, Gregory Mitchell QC said: “It is 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.”
Court Registrar Christine Derrett said she feared the club would build up more debts that would not be paid.
“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,” she said.
“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, representing the club, 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.”
Hood said two serious buyers had shown interest in taking over the club.
Championship (second division) side Cardiff City and League One (third division) club Southend United also faced winding up orders on yesterday. Both cases were adjourned for 28 days.