First Premier League club to file for bankruptcy protection looks set for relegation.
|Owner Chainrai has also outlined plans to sell Pompey stadium Fratton Park [GALLO/GETTY]|
The future of struggling English Premier League side Portsmouth was thrown into doubt after authorities challenged the club going into voluntary administration.
Her Majesty’s Revenue and Customs told a High Court in London they were concerned about the validity and independence of the administrators and whether in fact ‘administration is feasible at all’, a reference to the rising debts at the club.
HMRC raised their concerns that the firm that hired administrator Andrew Andronikou may have links with Portsmouth owner Balram Chainrai, compromising his independence.
After the lawyer representing HMRC told the court that there was still insufficient transparency in the club’s finances, the case was adjourned until the week commencing March 15 to let the club prepare a response to the allegations.
HRMC are frustrated that they come low down the pecking order of creditors at a club with almost $119.2 million of debts, and have demanded more information and are seeking confirmation the appointment of the administrators is valid.
“The question we ask, and supporters and members of the public ask, is how is it possible that this once-great club has become insolvent with liabilities exceeding assets by a figure of 65 million (pounds)?,” Gregory Mitchell, representing HMRC, told High Court judge Mr Justice Norris.
Last week Pompey became the first club in the 18-year history of the Premier League, world football’s richest domestic club competition, to seek the bankruptcy protection known as administration.
The protection seemed to have thwarted revenue and customs’ application to
have the club liquidated in its attempt to recoup about $26 million in unpaid tax.
Mitchell said HMRC wanted to know how a “succession of owners of the club have allowed such enormous debts to accrue”.
“We say there are serious questions which arise and require a full investigation into the financial dealings between the various owners of the club, which at the moment are shrouded in mystery.”
He said HMRC supported the administration but also wanted the questions answered and to be satisfied about “areas of concern”.
“We understand that any funds will come from Mr Chainrai and our concern is that there should be a full and independent investigation of the position and the transactions between the club and Mr Chainrai.”
If Andronikou is allowed to stay in his position, Portsmouth could lose ownership of their Fratton Park stadium.
Revenue and customs told the court that Andronikou plans to sell the team’s home of 112 years to Chainrai for $14.97 million.
It said the Hong Kong-based businessman would lease the stadium back to
Portsmouth at $1.79 million for the first season, raising the rent by 3 percent per year.
Portsmouth, bottom of the Premier League, are almost certain to be deducted nine points for going into administration but league officials are waiting for the outcome of the court case before deciding on the matter.