Are Portsmouth turning the corner?
Posted by John Beech on June 17, 2010
Pompey fans are not very used to good news, and this morning’s announcement that the creditors have accepted Andrew Andronikou’s proposal for a CVA (1), with its offer of 20p minimum in the pound is the nearest we’ve had to good news for some time. This figure has resulted in virtually all creditors accepting the offer, with the obvious exception of HMRC, who are looking for full payment.
The voting went to the wire, with 81.3% (based on money owed) voting in favour, the target for acceptance being 75%. The 18.7% consisted mainly of HMRC, but also one football agent owed £40,000 (2).
This is, of course, but a first step, and there are still hurdles to overcome:
- There is a 28-day ‘cooling off’ period when creditors can change their minds.
- HMRC may make a legal challenge. A core issue here is the percentage share of the overall vote they hold, which derives from the size of the debt. This has been somewhat of a moveable feast. HMRC have claimed £35m, Andrionikou £22m. The figure at today’s meeting is reported as £24m. If HMRC press their case and press the case regarding tax on image rights, there could be problems for the Administrator in keeping HMRC’s share at under 25% (or slightly less given there is at least the one football agent voting with them).
- If, for either of these reasons, the CVA is not formalised by the court in 28 days time, there is the threat of starting next season in the Championship on -17 points.
- Until the transfer embargo is lifted, the club can not sign new players, or even re-sign current but out-of-contract players. As thing stand, in theory we could see them turning out at Coventry for the start of the new season without 11 players under contract.
- In the longer term, Andronikou’s business plan to ensure that the necessary payments are made to move on from the CVA assumes no further relegation in the next five years. How realistic an assumption is this?
Andronikou can now concentrate on the major task of finding new owners, although little other due diligence can be expected before the CVA proposal is formally accepted by the court in a month’s time. Pompey with a CVA in place looks a bit more attractive than the Pompey we have been seeing of late. So, yes, the corner is being turned, but there are still some significant obstacles to be overcome.