Source: Telegraph
Portsmouth debts rise to £138m
Portsmouth administrator Andrew Andronikou is seeking a mandate from creditors to draw up a Company Voluntary Arrangement for the club to exit administration and so avoid a points penalty when they begin in the Championship next season. [LNB]Last month, Andronikou announced debts of £122.8 million, but that figure has already swelled by around £16 million. The increase is understood to relate to further claims from Her Majesty's Revenue and Customs. [LNB]Creditors also heard that the Football League pension fund had asked for £50 million from the club, although the administrator estimates the actual amount owed to the fund as closer to £200,000. [LNB]Portsmouth will get £48 million in 'parachute payments' in yearly instalments from the Premier League over the next four years, but the first payment is likely to go direct to the club's 'football creditors' who receive preferential treatment under football rules. [LNB]It is proposed that, in the first year, 20 per cent of all money made from player sales would go to creditors, with the full payments understood to be spread over five years. Creditors who are owed less than £2,500 are to be repaid in full. [LNB]The club's unsecured creditors are owed a total of £92.7 million. This includes £38.2 million owed to former owners Sacha Gaydamak (£31.5 million), Ali al Faraj (£1.7 million via his Falcondrone Ltd) and Sulaiman Al Fahim (£5 million), agents' fees of almost £10 million, and tax and VAT of £17.1 million. [LNB]The secured creditors, who can expect to get all of their money from future television revenues and parachute payments from the Premier League, include 13 clubs owed transfer fees of £17.3 million. In addition, 30 players - many of whom have left the club and at least one who has retired - are owed £1.8 million; eight, including Sol Campbell, are owed £3 million in image rights; and current owner Balram Chainrai is owed £14 million. [LNB]If a CVA proposal is approved, administrators from UHY Hacker Young will come forward with detailed proposals for creditors within the next 10 days. [LNB]Another meeting will then be arranged within 14-28 days to approve the CVA. This will require the backing of 75 per cent of the club's unsecured creditors. [LNB]Meanwhile, Nick O'Reilly, an insolvency expert who drew up Portsmouth's statement of financial affairs for the High Court, has described their business strategy as "suicidal."[LNB]'The difficulty is you had a group of individuals involved who were uncontactable or very difficult to get instructions from,' he said. 'The people on the ground had a really difficult task because they just didn't know who was in charge and who to get decisions from.'[LNB]Premier League chief executive Richard Scudamore, meanwhile, has defended the 'football creditors' rule. [LNB]"If you want to keep your status in the pyramid of football, in the 92, you have to pay off those people around you, because you are forced to trade with them again," he said.[LNB] "In football, you stay in the ladder, and the cost of staying in the ladder is you have to pay the clubs around you in the ladder. It is a football rule which has been there forever. [LNB]"I can defend the football rule, but it is difficult of course when local businessmen and St John's Ambulance are owed money. The only other option is to say you have to pay all of your debts in full, that, though, is not how the Insolvency Act is, it is not me who has made that more liberal. [LNB]'But we do require this closed group to be paid, because you are forced to trade with that closed group, then turn up and play the following Saturday."[LNB]
