The Portsmouth CVA Is Proven To Be Completely Above Board

The Portsmouth CVA Is Proven To Be Completely Above Board

By on Jun 18, 2010 in English League Football, Finance, Latest | 5 comments

It is a funny election where the returning officer decides who the electorate is. Technically, all administrations throw up this scenario, although it has only seemed important in recent years, purely by chance, at Leeds United in 2007 and Portsmouth almost ever since. But when I saw the “Portsmouth CVA accepted” headlines yesterday, I briefly prayed that I’d be able to read the story beneath without at any stage going “for ****’s sake!”

Administrator Andrew Andronikou had said in the strongest possible terms that HMRC would only have 21% of the creditors’ vote and that with only, literally, one or two other small creditors having expressed opposition, he felt sure that the CVA would be supported by the sufficient 75% and a bit more. I ventured into the story on the BBC website and skimmed through the opening paragraph. “Prospects look much brighter” – good – “exit administration this summer” – good…mind you, what bloody summer? Look, it’s raining again, they never forecast that…er…- “needing the support of those owed at least 75%” – yep, so, 79% tops, 75.0001%, oh God, there’ll be an appeal…please be 78 point something, please – Pompey’s proposed Company Voluntary Arrangement (CVA) got…81.3% of the vote.”

“For ****’s sake!”

Three days before the vote, Andronikou was telling the world HMRC were 21% of the debt, which he equated to “£20-21m” whenever pressed. All of a sudden, on election day, HMRC’s vote had both grown to £24m and… shrunk to 18.3%. This means that in three days, Pompey’s debts rose from £100m, as near as makes no difference, to £131m, as near as makes no difference. Not since Jesus rose from the dead has so much been accomplished in such a time. At the last minute, then, Andronikou discovered £30m down the back of the proverbial sofa. Fortunately, however, my dismay was hasty. On closer inspection, it seems that everything is all right after all.

This sort of thing has happened before. Claims can change, upwards and dramatically, without there being any hint of wrongdoing. The most illustrative example would a firm called “Mark Taylor and Co”, who claimed they were owed £59,756 by Leeds United when they went into administration in May 2007. By the time of the vote, however, their claim had risen to £273,615.32, Taylor himself clearing the matter up completely by saying: “There was no point billing because I knew I wouldn’t get paid. But the work had been done, so I was perfectly entitled to do that.” In the same administration, a firm called Yorkshire Radio, who had initially claimed £0.00, upped their claim, having had a more detailed look at their unsettled invoices and discovered that amongst that total of zero was £480,000 they had previously overlooked.

In both cases, this was just as well. Leeds’ CVA needed 75% support from creditors and, with the two amended claims, got 75.2% support. Without the two claims, the CVA would have failed and chairman Ken Bates, who was looking to take back control of the club he had previously placed in administration, would not have been able to do so. “Mark Taylor” was a solicitor who numbered among his clients… Ken Bates. Among Yorkshire Radio’s directors were a Mark Taylor and a Ken Bates. But auditors KPMG said at the time that they had “conducted (the CVA) in accordance with normal insolvency procedures and were advised by legal counsel to ensure we were operating in accordance with insolvency law and we have always acted within the bounds of that.”

So, as you can see, such occurrences have not only happened before but are also perfectly legitimate. It would still be interesting to see, though, who has discovered their extra debts and to what they refer. Andronikou has been very transparent about the vote, happily revealing that former Pompey manager Paul Hart voted against the CVA and that “you can only infer that (he) would rather the club go into liquidation.” Quite so. Only if Hart had been persistently lied to about the true state of the club’s finances, left with 12 fit players days before the start of last season, not been informed for nearly a month that the club was under a transfer embargo, summarily sacked without his contract being paid up and found that he had been left out of Andronikou’s original list of creditors despite clearly being owed this money, would he have had any remotely legitimate cause to vote against the proposals.

So Andronikou will doubtless reveal all in the next few days, which will clarify Portsmouth’s future once and for all. There’s plenty on the subject of football finance for the likes of myself and other, proper, journalists to write and comment upon. So I’m delighted to be able to say that we won’t need to bother about Portsmouth again for a long time.

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    5 Comments

  1. As a Leeds fan, it’s refreshing to see the administration process happen at a club where it can be reported without preheld judgements and prejudices. Now supporters can find out the inconvenient truths without being told how shady the characters involved are.

    Martin

    June 18, 2010

  2. Only after Portsmouth agree to go to court to effectively defend the Football Creditors 100% ruling and declared voting rights (which they will have to do when HMRC challenge the CVA on the 28th day) will we see whether the Portsmouth CVA Is proven to be completely above board.
    The chances are the CVA will be scrapped before hand and the club sold on, then without a completed CVA the club will have to ‘buy back’ the Golden Share (the entitlement for a club to play in the Football League) for a price…
    Expect at least a 15 point deduction – possibly more due to the crass way that Portsmouth were trading (particularly in the last transfer window) whilst insolvent.
    Since the member clubs agreed that exiting administration without a CVA should carry a points penalty only Southampton have exited a administration without a completed CVA and not received a points penalty.

    John

    June 19, 2010

  3. Southampton started last season on minus 10!

    Richie

    July 9, 2010

  4. @John: Southampton didn’t get a penalty for exiting administration without a CVA, as the new owners settled all debts as part of the process of buying the club. I don’t think anybody would suggest that we should be deducting clubs points for settling all their debts.

    @Richie: The 10 point penalty was for entering administration

    Rob

    July 10, 2010

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