Struggling English Premier League club Portsmouth have been given seven days to produce plans to settle an outstanding tax bill by a judge in England's High Court.
|A Portsmouth fan hopes for the best outside the Royal Courts of Justice in London [AFP]
The judge agreed to delay the winding-up petition tabled by the British tax authorities, despite expressing concern that the club was insolvent.
The seven-day reprieve removes the immediate threat of Portsmouth becoming the first Premier League club to go out of business.
Club officials were given the seven day deadline to present the court with a detailed statement of the club's financial position, so that lawyers for Her Majesty's Revenue and Customs (HMRC) can decide if the club is incapable of meeting its obligations to creditors.
The club are disputing the HMRC's bill for 7.5 million pounds in Value Added Tax and requested 21 days to provide the statement requested by the court.
That was rejected by the judge, who expressed grave concerns over the state of the south coast club's finances.
"I am very concerned about the financial status of this company,'' said Registrar Derrett, on Wednesday.
"It seems to me there's a very real risk that this company is undoubtedly trading while it is insolvent.
Portsmouth, a 112-year-old club that has had four separate owners this
season, said it had received two serious takeover offers that would clear its debts.
The south coast club are coming last in the league table and are heading for relegation, having lost 17 of their 25 matches this season.
The club could be put into liquidation if the court is not satisfied that it can continue to operate.
Portsmouth attorney Nigel Hood said shutting down the club would have "very serious consequences.''
"There would be irreparable harm caused, not only to the suppliers, but to the employees, 600 staff, suppliers, people who have paid in advance for their season tickets would lose their money,'' said Hood.
Talks on a negotiated settlement with HMRC broke down on Tuesday but, on the pitch, there was a glimmer of hope for the club's long-suffering fans as their side snatched a 96th-minute equaliser in a 1-1 draw with Sunderland.
Afterwards, Portsmouth manager Avram Grant said a football club could not be treated like any other business.
"It is not a normal business, it is not like an apartment you buy without feelings," the former Chelsea and Israel manager said.
"The club is 112 years old, it belongs to 250,000 people. It needs to stay alive."
"The club is 112 years old, it belongs to 250,000 people. It needs to stay alive"
But Registrar Derrett said Portsmouth, which employs 600 people, could not expect any special treatment.
"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," she said.
Portsmouth reached their current financial crisis less than two years after winning the FA Cup by over-spending on player transfers and salaries for its first major title since 1950.
The club was in serious trouble in August 2009 when Sacha Gaydamak sold it to Dubai businessman Sulaiman Al-Fahim.
Al-Fahim's ownership lasted less than six weeks after failing to refinance the club and pay the players' wages on time.
A subsequent takeover by Saudi Arabian businessman Ali Al-Faraj was portrayed as a necessary move to rescue Pompey, but the club still struggled to pay off debts to rival teams and its taxes.
Portsmouth were banned from buying players on permanent deals in the January transfer window, and any funds raised from player sales were taken by the Premier League to pass on to clubs owed money by Pompey.
Hong Kong-based businessman Balram Chainrai took a controlling interest in the club last week after exercising provisions linked to a loan his company made to the former owner, from Ali Al-Faraj, a Saudi Arabian national based in the British Virgin Islands.
Chainrai, Portsmouth's fourth owner this season, is hoping to stabilise the club before selling it on to new owners.
Star striker Jermain Defoe and midfielder Lasanna Diarra were sold in January 2009, Defoe's England team-mates Peter Crouch and Glen Johnson followed at the end of last season and Bosnia goalkeeper Asmir Begovic and key defender Younes Kaboul were offloaded last month.