LONDON, February 10- Portsmouth won a temporary stay of execution on Wednesday when England's High Court gave the club seven days to outline how it plans to pay a 7.5-million-pound tax bill.
Despite the judge in the case expressing concern that the club is insolvent, she agreed to delay the implementation of a winding-up petition tabled by the British tax authorities, removing the immediate threat of the club being put into administration.
Portsmouth’s lawyers were given seven days to present the court with a detailed statement of the club’s financial position in order to give the court a basis for deciding whether, as lawyers for Her Majesty’s Revenue and Customs (HMRC) argued, it is incapable of meeting its obligations to creditors.
Portsmouth disputes 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.
"It seems to me there’s a very real risk that this company is undoubtedly trading while it is insolvent," Registrar Christine Derrett said.
If Portsmouth fail in their fight against the winding-up petition, they will become the first Premier League club to be placed in administration, a move that would lead to a nine-point penalty being imposed and effectively condemn Pompey to relegation.
That is looking very likely in any case. Portsmouth, who have lost 17 of their 25 matches this season, are currently bottom of the table and six points adrift of Bolton, the club occupying the last survival spot.
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."
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.
Hong Kong-based businessman Balram Chainrai took a controlling interest in the financially-stricken club last week after exercising provisions linked to a 17-million-pound 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.
Portsmouth’s financial difficulties have been underlined by the club’s failure to pay staff and players on time on four occasions since August and former owner Alexandre Gaydamak claims he is still owned 28 million pounds.
The club’s precarious financial position — the result of overspending on players and an unsustainable wage bill — became evident towards the end of 2008 and resulted in the dismantling of the squad which won the FA Cup that year.
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.
Cardiff City, the club Portsmouth beat in the 2008 Cup final, and League One club Southend also faced winding-up orders from HMRC on Wednesday. Cardiff were given 28 days to clear an outstanding bill of 1.5 million pounds while Southend’s case was adjourned for the same period to allow for further legal arguments.
