Portsmouth FC may not finish season warn administrators

PKF ADMINISTRATORS appointed to Portsmouth FC have said there is a danger the club will not have enough funds to finish the season.

The Championship club entered administration on 17 February with PKF partners Trevor Birch, (pictured) Ian Gould and Bryan Jackson appointed.

The administrators have said Portsmouth is in serious danger of being unable to finish the season, as discussions with the Football and Premier League broke down – meaning it is unlikely to receive parachute payments to keep it going.

“We had previously stated that there was a real danger of the club running out of cash before the end of the season. The risk of this happening increases substantially without the money from the football authorities,”  Birch said.

“Unless something significant happens, there is a real possibility that we may not be able to fulfil the season’s fixtures.”

However, PKF has drawn up battle lines to fight for the club’s survival.

Accountancy Age understands Portsmouth is currently owed about £14m in fees for things including image rights from the Premiership and the Football League in “parachute payments”.

Of the £14m, £2.2m is due to paid this season to one of the club’s former owners, thought to be Sacha Gaydamak, according to a source close to the situation.

PKF administrators have asked their lawyers to challenge this arrangement.

When Portsmouth FC entered administration in 2010 it transferred the business into a new holding company and the original company (Portsmouth Football Club Limited) entered liquidation. As part of League rules the club had to exit administration using a Company Voluntary Arrangement (CVA).

A CVA is an agreement to repay a portion of debt over a period of time, while allowing the business to continue trading. The process must have the support of at least 75% of creditors by value in order to be pushed through.

As part of that CVA deal the £2.2m parachute payment was earmarked for a previous owner.

PKF administrators are talking to lawyers to see if the £300,000 held by collapsed parent company Convers Sports Initiative (CSI), the major shareholder of Portsmouth, can be returned to the club.

Accountancy Age understands that when PKF administrators were appointed, CSI handed over about £575,000 to the administrators, but kept hold of £300,000 to pay for some of the cost of its administration.