Pompey are apparently 48 hours from liquidation

If there's one thing I understand about Insolvency generally it is the huge amount of grey areas that exist. Whilst there are rules and laws in place, the fact is that all Insolvency matters are dealt with by a licensed Insolvency Practitioner. Within reason, what they see as fit becomes acceptable, provided the creditors agree during negotiations. I once had five Insolvency Practitioners working for me and I asked each of them the same question. I received five different answers!

My point is that I cannot provide a definitive answer to the questions on here but I can explain the process. You can then draw your own conclusions.

First of all, put aside the fact that PFC are already within a CVA. That is almost irrelevant. A winding up petition is simply there as a method for a disgruntled creditor to petition the court to intervene in the recovery of a debt. A fee is paid (to discourage minor creditors) to lodge the petition and a hearing date for the petition is published in the relevant gazette. At the hearing, the court needs to establish if the debtor, having been awarded due leniency and notice by the creditor, has been unreasonable in repaying their liability. If that is deemed to be the case, a winding up order could be granted. Depending on the state of the business concerned (it may for example have significant assets but be suffering from short term cashflow issues) a number of outcomes could arise. In no particular order they are:

• No action taken
• Administrator appointed to reach a mutually satisfactory outcome
• Administrator appointed to liquidate the business

I should also point out that there exists a legal concept called reversible transactions. In the event of bankruptcy or liquidation, any transaction undertaken within the previous five years can legally be reversed. This prevents both Joe Bloggs from signing his house over to his wife and then going bankrupt and also businesses from stripping assets. All matters prior to the CVA are tied up within it but should the club start to sell players now in order to pay debts, they (as they clearly know) would be complete fools. Buying clubs are aware of this too so you can be certain that offers being made are derisory anyway.

So, a few things to consider here. PFC have missed just two tax and NI payments to HMRC as a direct result of their new backers going into administration. Is the issue of a winding up petition so quickly therefore reasonable? Remember, the CVA is irrelevant. The petition relates entirely to the current missed payments and I can assure you that there are thousands of businesses further behind than two months.

The CVA only becomes relevant in discussions relating to PFC's ability to pay going forward, at which stage the entire concern is looked at. The calculations are straightforward; X coming in Y going out means that this business needs to find Z in order to survive as a going concern. Conversation will then turn to how Z can best be found.

If Z exists in assets and the court agrees that the debtor has been wholly unreasonable in failing to repay their debts, then those assets can be ordered to be sold for the benefit of the creditors. Of course, it isn't just a matter of Y being £1.6M in unpaid tax to date, it will also take into consideration future liabilities.

All things considered, if the sale of PFC's squad (their only assets not already tied up in the CVA) could safeguard the operation of the business as a going concern (including payments to the CVA), then the company won't be wound up. As dispensation for sales outside of the window would need to be gained, my money is on an administrator being appointed by the court (not Andronikou) with an explicit mandate to find a buyer within a certain timeframe or to start selling off the players. Inevitable points deduction to follow.

Alles Klar?

 

So from the sounds, were Pompey to opt not to sell off players in this window, and their buyer(s) fell through at least temporarily in the next couple weeks, it wouldn't be a death sentence; if the court found that they'd be likely able to raise the money over the summer by selling off much of the roster and keep up payment thereafter, they'd be allowed to survive. Is that somewhat correct?

 

I'll be watching it again this year, with my bro and a few mates. Hopefully this time NEP can beat New York. I'll be cheering on NEP as Brady is my fave player.

 

Pretty much Schad although I'm not sure they'd be allowed to wait for the summer. Some sales might be demanded sooner provided permission could be gained from the league (but I think there's already a precedent for that).

 

Thanks for the info, hotbovril. As a layman, following the ins and outs of the Pompey case is a tad confusing, so the explanations are helpful.

What a sorry mess this all is.

 

Thanks Hotbovril for that information and clear explanation, it has cleared up a number of questions now.

I have another question, if you wouldn't mind. I've been reading the News site and there are an awful lot of fans who are willing to dip into their pockets to pay this particular bill and give the club time to find either an owner or find another way to keep the club going. Apparently and according to David Lampitt the club is unable to accept a donation, even if it was given through the Supporters Trust. That seems odd to me. Even if it was termed as a "long-term" loan, surely it can accept having the bill paid (notwithstanding the laundering money legislation - as the donors would all be named) - can you think of any reason this would not be acceptable?

 

I, and I suspect a lot of you, gave donations during Saints administration, but perhaps that's a difference between WU orders and administration.

 

Bit late now though. How many home games before the court date? There are just not enough potential ticket buyers to even touch the sides of Pompey's debt. The only thing to prove is that there is potential to be able to pay in the future.

 

Not everyone can get to the games though, although a couple of people are saying they are buying tickets that they can't use as a way of doing it.

 

Sadly yes. By paying one creditor but not another, you are creating a preference (see http://en.wikipedia.org/wiki/Pari_passu ) and this will simply rock the boat in all negotiations going forward. You can be sure that if HMRC aren't getting paid, others aren't either. The only way a supporter's trust could get involved at this stage is in an outright purchase.

 

Thanks hotbovril. That clears that up. Perhaps we should do as my friend says they did at Chelsea, before Mr Rich Russian came along - have oil drums all around the park for supporters to chuck cash into.

We have only been told about HMRC - I so hope that there isn't more to come out of the woodwork.

 

Thanks for the information. On that score, I believe (but cannot remember exactly) that Plymouth were given special allowance to sell Jack Stephens to us under similar circumstances last year...it happened well outside the transfer window.

 

Well to put a rosier perspective on things one thing is certain. Any sensible businessman looking to take over at an ailing company does so at the very last minute, purely because that is when the price is at its absolute lowest. Desperation dictates that. Look for a buyer to emerge at the 11th hour....

 

A rich idiot who never reads the newspapers and knows nothing about football is the best bet then.

 

Hate being so pessimistic, but if you are not a fan of Pompey why would you get involved in this saga. If uninvolved and rich, I would rather buy a promising lower league or non-league club and see what could be done with reasonable injections of cash.

 

Just sell your players, simple as. Saints had to do it and so did leeds and the rest. The fact that it is "not the fans fault" doesn't mean you do not have to follow the same rules as everyone else. This is no longer a footballing issue but an ethical one.