Portsmouth Football Club today released a statement confirming that it has applied to be placed in administration, with the High Court to decide whether it accepts the application on Friday.
David Lampitt said that the application was submitted on the condition that UHY Hacker Young would be appointed as the administrator, rather than one appointed by the court. The decision was made after consulation with "advisors" such as finance director John Redgate.
If the court accept the decision, Andrew Andronikou will then take control of the club and may loan or sell players to raise some instant capital to pay the bills.
Should the court reject the application, then that will pave the way for HMRC to liquidate the club next Monday.
It should be noted that the High Court might only grant the club administration if it can appoint its own administrator. Even if that is the case, Balram Chainrai can simply overrule the decision as the club's only secured creditor and therefore appoint UHY Hacker Young anyway.
Earlier today, it was confirmed that the Premier League had advanced around £1 million of parachute payments into Portsmouth FC's account. However, because the winding-up order is still in place, the account has been frozen.
If the club is successful in being placed into administration, that account will be unfrozen. There is currently around £2 million in that account, not enough to pay both HMRC's tax bill and the staff wages. What happens to that money is up to the administrator.
There are more parachute payments to come for the rest of this season and for the next two seasons. In theory, Pompey could beg to receive this money early but that would cause allsorts of reprecussions and would only solve Pompey's cash crisis in the short-term.
The instant result of Portsmouth being placed in administration will be the ten point penalty. I think the team could live with that. I think we have the squad and the manager to deal with that pressure.
But then comes renegotiating the CVA, which could prove to be extremely difficult. It was tough enough to get Pompey's unsecured creditors to accept 20p to the pound of what they were owed last time.
Do you think that they are likely to accept a worse deal this time? Even if the other option is getting nothing at all? Let's face it, most of Pompey's small creditors hadn't received a penny under the previous regime so could you blame them for rejecting a second CVA?
Failure to agree a second CVA would be likely to see Pompey hit with a bigger points deduction like Bournemouth did when they were going through the mill.
It might not matter in the long term anyway, because, like many other fans, I cannot see a way out of this situation for Pompey. Andrew Andronikou claims that there'll be people queueing up to buy the club when it's placed in administration, but would people realistically stump up around £20 million in a period of time with absolutely no return on that investment?
Just to add insult to injury, there are even more bills to pay as Australian clubs ECU Joondalup and Blacktown City Demons claim that Pompey owe them a total of £360,000 for Aussie youngsters, including Ryan Williams, bought from them before the financial troubles began.
Neither club has been paid any of what it has been owed by Portsmouth and whatsmore, Joondalup are entitled to 20% of Ryan Williams' transfer fee to Fulham, which is actually reported to be £295,000 rather than the original reported sum of £500,000.
This club is in a mess that will never be cleaned up. Perhaps it is better to wipe the slate clean and start again.
Source: FOOTYMAD
