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Pompey Takeover Saga


Fitzhugh Fella

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I wrote to them on the 4th Dec re the £10.8m loan and an "unfair advantage to other clubs" and received the following reply on the 7th Dec.

Thank you for your email.

 

The Board will be considering all the circumstances of this case and until such time as all the information is available and the Board have made a decision it would be inappropriate for us to comment on the points you raise.

 

Thank you for contacting The Football League.

I bet you get the same reply.

 

 

On a related subject I see HMRC went after the directors of Luton Town

http://www.bis.gov.uk/insolvency/news/news-stories/2011/Sep/Former-directors-of-Luton-Town-banned

Four former directors of Luton Town Football Club Limited (“LTFC”) were disqualified from acting as directors or in any way managing or controlling limited companies for periods ranging from three to seven years On 5 September 2011, following a six-day trial at the High Court in London. The disqualifications follow an investigation and proceedings brought by The Insolvency Service

The Investigation by The Insolvency Service found that the directors of LTFC had breached Football Association (FA) and FIFA rules and caused LFTC to trade at the risk and detriment of HM Revenue and Customs (“HMRC”), being in arrears with PAYE and NIC within a few months of commencing to trade and latterly not declaring or paying its VAT liability.

During the same period of July 2004 and February 2007 the directors individually either caused or allowed the company to trade at the risk of and ultimate detriment of HMRC which was owed at one point £3,578,661. The Court heard there was a pattern of non payment, and chasing from HMRC
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Has a list of CSI's creditors been published? I think that this is the major sticking point.

 

CSI Debts - Chanrai - c. £20m

CSI Assets - PFC, North One, Loan to PFC c. £11m

 

That was before north one sports when to the wall leaving CSI with a debt of £3m to the parent company they bought it from so now its.

 

CSI Debts - Chanrai - c. £20m, North One £3m

CSI Assets - PFC, Loan to PFC c. £11m

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Has a list of CSI's creditors been published? I think that this is the major sticking point.

 

CSI Debts - Chanrai - c. £20m

CSI Assets - PFC, North One, Loan to PFC c. £11m

 

Before CSI bought Portsmouth Chinny had a charge over Nottarf to secure his debt, but this was debt owed by PFC. It occurs to me that the takeover was a vendor-financed purchase (this practice doesn't have a very good reputation in the financial world). So, without evidence and speaking entirely hypothetically, Chinny lends CSI the money to make the purchase of PFC, with a floating charge over all of the assets of CSI and its subsidiaries with a condition that they use the money to repay the original loan. This would suit Chinny because he would now have more collateral to cover the debt. As it turns out all of the other collateral turns out to be as worthless as Poopey.

 

So, if Chanrai is the sole creditor to CSI he could take over the whole of CSI, write off the loan of c.£11m to Portsmouth without needing to part with any cash and he's back where he was before CSI. If there are other creditors, eg the Lithuanian government, then this wouldn't work. If Chinny takes PFC as the security for his loan, the other CSI creditors or the equity holder (Antonov or the Lithuanians) can say to Portsmouth, "We'll have our money, please". In this case Chinny has to put his hand in his pocket for an additional £11m.

 

So Chinny has a problem. http://youarenotsosmart.com/2011/03/25/the-sunk-cost-fallacy/ . Does he throw good money after bad to recoup his loan? How much value would there actually be in liquidation? As a creditor of CSI he should be requesting that they pursue repayment of the £10.8m loan they made to Portsmouth as it is a significant 'asset' of the company. However, if he did pursue this debt, Portsmouth would be bankrupt, as they can't repay it. He has funded the last 4 purchases of the club. Should he fund a fifth?

 

When I saw the story yesterday about PFC owing the taxman £1.6m I thought that all of the arguments about -10 points would be irrelevant if HMRC started to get aggressive. Now with the reports of them issuing a Winding Up Petition the club will be in admin the day before the Winding Up order is enacted, unless they find a new owner beforehand, or unless they can raise enough money from player sales to fund the company to the end of the season.

 

When it comes to player sales, it won't be TBH who goes, it'll be the players that people actually want: Henderson, Ward, Pearce. These sales wouldn't reduce the wage bill by much and firesales never raise decent prices. The figures being bandied about for the club to survive to the end of the season were c. £5m. Do they have players that other clubs will pay a combined £5m + the cost of paying up the contracts for, with the cash being paid upfront?

 

Also, on the cash only policy for tickets, here's another unproven speculation: what if the bank have withdrawn overdraft facilities? In this case, any money paid into the bank would go direct to repaying the overdraft and the club wouldn't have access to it, but they would have access to cash paid. Expect to see the staff getting paid with brown envelopes stuffed with notes. I hope Ben Haim has a wheelbarrow.

 

weimar-wheelbarrow.jpg

 

Interesting 1st post. Welcome aboard.

 

One comment from memory. I have read in the mess regarding the Television Rights for WRC, that NOS were alleged to owe 3 mil to somebody (probably WRC)

 

So potentially Chinny is even more out of pocket than he imagined. It may be that his Admin of CSI gamble caused more problems than it solved

 

One other issue that we should not overlook is that Chinny is not a UK based Businessman. It is extremely possible that his knowledge of the nuances and the like of UK Company Law and of course UK Negotiation Techniques is not as strong as say someone who has spent all their life in UK Business.

 

It is quite possible that a perfect storm of mistakes has led to where they are.

 

IF Chinny has miscalculated, then it will cause some releif (or even) entertainment up the road to go with their pain, considering how unpopular he is.

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Time for a new avatar me thinks, I've had a nagging doubt all along that they would get away with it, with no real retribution for their illegal actions. But with the news last night & all the complications around CSI & the Lithuanian Goverment. I just think Chinny has backed himself into a corner. AA & Lumpetts comments over the last few days have been tantamount to admissions of culpability. It has a feeling that the end game is upon us.

anyway of for some bacon on toast for brekie

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IF Chinny has miscalculated, then it will cause some releif (or even) entertainment up the road to go with their pain, considering how unpopular he is.

 

I've never quite understood why this is the case. As far as I can see, he is simply a victim of circumstance; why do the few see it so differently?

 

(I'm assuming Chinny is Chanrai btw..)

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Just as a reminder, the last time our slippery fisherman's friends down the road were issued with a WUP, they still managed a "takeover" before the hearing.

 

http://www.guardian.co.uk/football/2010/feb/03/balram-chainrai-portsmouth-owner

 

Without meaning to sound negative, they've been here before and got away with it. Let's see if the courts are as lenient this time around.

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Just as a reminder, the last time our slippery fisherman's friends down the road were issued with a WUP, they still managed a "takeover" before the hearing.

 

http://www.guardian.co.uk/football/2010/feb/03/balram-chainrai-portsmouth-owner

 

Without meaning to sound negative, they've been here before and got away with it. Let's see if the courts are as lenient this time around.

 

Yep - and all done because the (in)Justice gave them more time after they went to court without evidence of solvency.

 

Lightening doesn't strike twice.

 

Quote from article - Portsmouth are due in court to appeal against the petition before the hearing next Wednesday. Chainrai appealed to HMRC to understand the club's financial predicament. He said: "To help Portsmouth succeed we need the support and understanding of Her Majesty's Revenue to work out a solution."

 

 

Still feel you've succeeded then Balram?

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And it's inextricably linked as one economic entity. Not sure if it applied though since that wasn't the case when csi went into admin.

 

That is all completely irrelevant now :D

 

By receiving a WUP from HMRC the club has now had its very own insolvency event which the FL cannot ignore.

 

Frankly, I think HMRC has learnt from its previous mistakes, and has played a patient waiting game - it could have issued the WUP once they missed the first £800k payment, but waited until they missed the second. This means they are the ONLY creditor of any note, thanks to chinny, who took his charge out on CSI and not Pompey, so he isn't a creditor of Pompey this time round. They also waited until the players were paid so at the time of the insolvency event there were absolutely NO secured creditors - I doubt very much that the £10.8m loaned by the bank robber was secured on anything, well nothing that doesn't already have a secure charge on it by someone else!

 

So, bring on the points deduction, followed by a winding up of the club, a late Xmas pressie :D

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I had a vision whilst sitting in a traffic jam,

 

The sun was setting over a lifetime season ticket and a shaft of red light caught Johnny Westwood entering a tattoo parlour to get his tat changed to "Pompey till they died. R.I.P"

 

Let's be kind - he was having it changed to "AFC Pompey"

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From the Guardian, AA:

 

"We are trying to find [a new owner] who is not going to be there for five minutes"

 

Five minutes is a bit too ambitious it appears, are they aiming for 4 minutes?

 

Also:

 

"The issuing of the petition effectively means the club loses its ability to use its bank accounts."

 

Seems to be the reason for cash only sales.

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To whoever it may concern,

 

I should be grateful for your comments on the below:

 

1. Portsmouth Football Club ("the Club") are paying their players ahead of paying their tax. ( http://www.guardian.co.uk/sport/2012...?newsfeed=true )

2. Andrew Andronikou, the administrator for the Club's parent company, Convers Sports Initiatives ("CSI"), is clearly acting for the Club in equal measure. He continually refers to the Club as "we", as evidenced by the above Guardian article.

3. The Club's Chief Executive, David Lampitt, has admitted that the Club cannot continue to trade solvently now the backing of CSI has been withdrawn - does this not mean the Club and CSI are "inextricably linked as one economic entity"? ( http://audioboo.fm/boos/632962-part-...lation#t=0m43s http://audioboo.fm/boos/633257-part-...ub-s-ownership )

 

I look forward to a response shortly,

 

Kind regards

 

I've now emailed the above to enquiries@football-league.co.uk, feel free to do the same. I fully expect to get a standard response, but still important to make the message heard. Is it worth getting Forest, Ipswich, Doncaster, Coventry forums in on the act? Or do people think this is pointless as P*mpey are heading toward a points deduction regardless? Part of me thinks the latter may be the case.. :D

Edited by saintmatt
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it never rains but it pours....Solent reporting that Portsmouth Dockyard is facing closure.

 

Though they've glossed over the fact that the football club is on the brink.

 

How ironic is that - the club hits the buffers just when the land they need to build the Harbourdome incorporating undersea casino, cathedral, petting aquarium and Saab dealership is up for grabs.

Unlucky.

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So, planning ahead, how is the agenda for tomorrow's instalment of the 'pompey takeover saga' thread shaping up?

 

Who's likely to make the first move tomorrow? HMRC? AA? The Football League? Chainrai? Lampitt? Uncle Tom Cobbly?

 

(of course, I am excluding the Bagpuss sideshow from this)

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It makes sense for the Football League to take their time and see how the admin and court case pan out before issuing the points deduction.

 

Wether they deduct them now or a week before the end of the season makes no difference. As the weeks go by pompey seem to be making the decision easier and easier.

 

There has to be a chance for a points deduction on the tax evasion charges, they are already looking into the current admin situation(s), plus I suppose if they don't service the CVA from the last admin there could be a further deduction for that (AFC Bournemouth style -17 anyone?).

Edited by aintforever
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tell me how you would have felt if the FL had relegated us by 9 divisions? Yes the skates seem to continually take the ****, but don't ever forget that we also ****ed up our own finances and went into administration.

 

It's a question of levels though, Chez...we did get relegated effectively two divisions because of poor management and financial mismanagement...albeit the 9 points was the only football levied punishment. Ours was for a relatively small amount against which there was a lot of equity and we had tried to balance the books with player sales plus Leon Crouch put his own cash up to keep us solvent.

 

If you campare the level of debt and the level of intention to try and pay the two clubs' way then 9 divisions isn't really enough for 'them' in my opinion.

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tell me how you would have felt if the FL had relegated us by 9 divisions? Yes the skates seem to continually take the ****, but don't ever forget that we also ****ed up our own finances and went into administration.

 

Chez, I would have felt absolutely gutted as would we all. But if those are the rules, those are the rules and they have to apply to everyone regardless. When I quoted the example of Richmond they were one of the top sides at the time equivalent to any of the top 4 in the EPL today. Imagine the earth shattering consequences should admin happen to one of those under the RFL rules.

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And here http://www.portsmouth.vitalfootball.co.uk/forum/forums/thread-view.asp?tid=14735&posts=20

I particularly like Pompey Jake LOL. Maybe HMRC will give us a bit of time as if we went into Admin again they wouldn't get it all back. Yeah right after getting screwed for 37-mill last time they will give you lot the benifit of the doubt I think not! Seems as though a some of them are waking up to it at last.

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It makes sense for the Football League to take their time and see how the admin and court case pan out before issuing the points deduction.

 

Wether they deduct them now or a week before the end of the season makes no difference. As the weeks go by pompey seem to be making the decision easier and easier.

 

There has to be a chance for a points deduction on the tax evasion charges, they are already looking into the current admin situation(s), plus I suppose if they don't service the CVA from the last admin there could be a further deduction for that (AFC Bournemouth style -17 anyone?).

 

Doesn't the timing matter in terms of whether they get the deduction this season or next?

 

That said, if they're liquidated then I get your drift...!

 

:-)

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Didn't someone suggest that if there's a WUP, then the club can't be sold (it has to be ringfenced as an asset) nor can the club's assets (its players)?

 

Someone should point that out to the deluded phew.

 

Yes, but someone can still buy the "fiscally totally unconnected" parent company and start injecting funds into the subsidiary, couldn't they?

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One of them wants the council to make Nottarf Krap a Listed Building, which would save it from demolition without Listed Building Consents.

Bearing in mind how ancient that place is it might not be as daft as it sounds... :lol::lol::lol::lol:

 

There's actually some logic there. The similarities between stone henge and nottarf krap are eerily close...

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I'm not sure that the club could go into administration. An administrator has a legal duty to get the best deal for creditors and cannot run up new debts. If Pompey don't have any cash then they can't fund the administrators costs.

 

Last time round Chainrai funded the administration, will he do it again?

 

Also, another classic from PompeyJake: "Surely we wouldn't have been allowed to have bought in a free agent and line up more loan signings if it was that bad.

I can't understand how this can suddenly just become an issue. Surely the fact we didn't pay them in December would have sent out a warning sign to people within the club and any further signings would have been delayed or stopped. Its either gross mis-managment or Admin andy trying to speed up buyers."

 

Anyone vote for speeding up buyers?

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Didn't someone suggest that if there's a WUP, then the club can't be sold (it has to be ringfenced as an asset) nor can the club's assets (its players)?

 

Someone should point that out to the deluded phew.

Here is a link that should shed some light http://www.companyrescue.co.uk/company-rescue/guides/what-is-a-winding-up-petition

I read the salient points as no they are not allowed to sell the business. Agree a CVA or administration or fight it legally. Just the basics. Are legal bods will know better.

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And here http://www.portsmouth.vitalfootball.co.uk/forum/forums/thread-view.asp?tid=14735&posts=20

I

particularly like Pompey Jake LOL. Maybe HMRC will give us a bit of time as if we went into Admin again they wouldn't get it all back. Yeah right after getting screwed for 37-mill last time they will give you lot the benifit of the doubt I think not! Seems as though a some of them are waking up to it at last.

 

Haha Pompey Jake is a legend... I like this gem a little further down...

 

"Anyone else think this may be Admin Andy trying to speed up any potential buyers?"

 

Absolutely priceless!!

 

That's right Jake, AA's plan is to not pay any bills because that means any buyer would have to move quickly and not do due diligence properly. Of course, having the axe of a WUP over them makes them infinitely more attractive to a buyer :lol:

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tell me how you would have felt if the FL had relegated us by 9 divisions? Yes the skates seem to continually take the ****, but don't ever forget that we also ****ed up our own finances and went into administration.

 

Precisely. This entire thread is just about the finest example you'll ever see of utter hipocracy. All fuelled by vicious hatred and jealousy...

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Precisely. This entire thread is just about the finest example you'll ever see of utter hipocracy. All fuelled by vicious hatred and jealousy...

 

We're asking the questions, because you dirty cheating Skate B******s haven't.....

 

....for the last 5 dodgy owners.

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Precisely. This entire thread is just about the finest example you'll ever see of utter hipocracy. All fuelled by vicious hatred and jealousy...

 

*Hypocrisy

 

On the face of it our admin and the skate admin might look the same, but remember this:

 

- we didn't screw the public purse OR local charities and businesses

- the debt we had was far smaller than that of the skates

- we had a far greater asset base (ergo our liability/asset ratio was far lower)

- we didn't make the same mistake again, and again, and again, and again..

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Precisely. This entire thread is just about the finest example you'll ever see of utter hipocracy. All fuelled by vicious hatred and jealousy...

I really shoudn't need to say this, but for the sake of those who still don't 'get it'...

You stole Premiership status and an FA Cup with a lot of money that wasn't yours and then went bust for millions- and you still havent learned

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Precisely. This entire thread is just about the finest example you'll ever see of utter hipocracy. All fuelled by vicious hatred and jealousy...

 

Possibly heading into your third, yes third Administration in 13 years, what does it take for you to ask a single question!. Jealous, nah! all this thread has done, is ask the questions you webbed fingered few, should of been asking.

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In the financial quagmire that is PFC, I've lost track of who owns what. But am I correct in believing that Chanrai has a charge on FP, or has it been transferred to CSI? In which case, is Chanrai able to put PFC in Admin or not? He's certainly not a director and isn't now a creditor of PFC?

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