Saturday 9 February 2013

Threat of liquidation remains as Portsmouth FC (2010) Ltd creditors react to Football Leagues decision



February 10th marks one week short of the one year anniversary since the appointment of Trevor Birch, Bryan Jackson and Ian Gould of accountancy firm PKF (UK) LLP as administrators of Portsmouth Football Club (2010) Ltd. Commenting on the case at the time of appointment Trevor Birch said “Our aim is to achieve an outcome that helps ensure the club’s long term survival, preferably by finding a suitable buyer.” Whilst that may have been their outlining aim going into the process as an administrator appointed by the High Court, first and foremost their duty is to provide the best deal possible for the creditors of the business. The fact that the business also happens to be a football club with a loyal support of tens of thousands of fans is sadly irrelevant in the eyes of the law. A football club is a business just like any other and has a duty to make sure it pays its creditors on time.

Birch et al set about that process by attempting to enter into a Company Voluntary Arrangement (CVA). For a CVA to be passed it must be approved by creditors who are owed at least 75% of the debt. Without the 75% vote the company faces voluntary liquidation. It is these creditors that the process of the CVA is built around; the possible continuation of the business only exists if it can be proven that by doing so it will provide them with a better financial return on monies owed to them. 

What is an unsecured creditor?

Contact Law defines them as such;

An unsecured creditor is a creditor who does not have security for their loan to a company. On liquidation of a company, the liquidator must follow a statutory order of payment when distributing the assets of the company. This statutory order of payment means that lenders with security for their loan, in the form of fixed or floating charges, and preferential creditors, will all get paid before unsecured creditors. While preferential creditors are a type of unsecured creditor, preferential creditors are paid before other unsecured creditors. On liquidation, a creditor solicitor can help with claiming money owed to an unsecured creditor and can also advise a company as to whom their unsecured creditors are.

It is unusual in a compulsory or Creditors' Voluntary Liquidation for unsecured creditors to be paid in full. Usually they will be paid a proportion of the money owed to them, for example, 80p for every £1 owed. As a result of their position in the statutory order of payment, an unsecured creditor will often lose money on their original investment. If you are an unsecured creditor who has not received payment in accordance with the terms of your loan, an insolvency expert can assist with applying for liquidation of a company. It is worth noting that the person applying for the liquidation of a company receives no benefit for doing so and will receive payment in accordance with the statutory order of payment.

On February 7th the Football League announced that a bid to buy the ailing football club by football financier Keith Harris had been rejected and that the Football League would not accept any new bids. Furthermore they made announcement that "In the event the PST bid does not succeed and Portsmouth do not exit administration before the end of the current playing season, the club will lose its membership of the Football League."

Portsmouth's administrator Trevor Birch said: "We note the Football League board's statement and will consider its implications."

What exactly are those implications and what are the possible ramifications for the football club?

It might sound to obvious a point to state but if the football club loses its membership from the Football League then liquidation is the most likely outcome. Whilst the news of the Football Leagues decision was warmly greeted by the Portsmouth Supporters Trust who had previously been named as preferential bidders by the administrators, it’s worth considering why despite this fact, that PKF had approached the Football League with the offer made by Keith Harris in the first place last week. The answer lies in the deal being offered to the creditors which as I’ve already mentioned above is the primary concern of the administrator; to ensure that they are given the best possible financial resolve on monies outstanding to them. The deal offered by the Supporters Trust is said to be 2p in the £1 whilst the Harris offer was 3p in the £1. Whilst on paper a penny might not seem that much difference, when taken in the context of the total debt outstanding by the business it equates into a figure of hundreds of thousands of pounds extra that has been offered to be paid to these unsecured creditors. By law it didn’t matter that the administrator had already agreed to treat the Supporters Trust as preferred bidders, its obligation is still for them to obtain the best deal possible for creditors despite any agreements they might have already entered into with other parties such as the Supporters Trust.

In January PKF were granted an extension by the High Court until August in which to attempt to allow the company to remain trading and exit administration via the use of a CVA. Having been charged by law, by the High Court upon entering administration to represent the needs of the creditors the implications for the administrator are quite considerable given the statement made by the Football League and the factor that the Harris bid has offered better terms for the creditors. PKF cannot simply shrug their shoulders and ignore the job with which they’ve been charged by law to do.

It should come as no surprise that the creditors haven’t taken to the news as well as the Supporters Trust have following on from the Football Leagues decision. It’s also important to point out at this juncture part of the definition of an unsecured creditor as given above, namely; this statutory order of payment means that lenders with security for their loan, in the form of fixed or floating charges, and preferential creditors, will all get paid before unsecured creditors. One of the issues brought up at the High Court recently was the floating charge held by previous owners Portpin Ltd who had been attempting to take over the club in a rival bid to the Supporters Trust.

The failure of the Football League to consider the deal offered by Keith Harris carries with it a very real threat of the club going into liquidation and shouldn’t be seen as a smooth transition towards new club ownership by The Supporters Trust and being able to exit administration. This isn’t simply the case of keeping a football club from going out of business; this is a requirement of law for the administrators PKF to provide the creditors with the best deal possible on the money that they are owed. The Football Leagues belief that a new bid wouldn’t be able to be completed by the deadline provided by them doesn’t stop the decision from being challenged and there’s good cause to believe that will happen in the very near future.

Information has been passed on detailing the creditors concerns over the Football Leagues apparent stance to only consider the Portsmouth Supporters Trust bid and not the Keith Harris bid. These concerns are repeated in full here in good faith for the benefit of all the clubs fans in an attempt to show that the club remains in a very real threat of being liquidated. It should not be seen as an attack on the Supporters Trust who have worked tirelessly in an attempt to allow the club to remain trading and be able to exit administration via a CVA. It is also not a propaganda tool passed on by Portpin Ltd who I hasten to add I have never had any contact with. It is replicated as stated for the benefit of all the clubs fans in an attempt to highlight the possible danger that the club could be liquidated come the end of the season.

"We are very concerned about this latest development which appears to fly in the face of the football leagues' own insolvency policy. The decision appears to have been based upon a lack of information regarding the readiness to complete of the Keith Harris bid, the legal uncertainty regarding the legal case (which the PST bid is conditional upon) but hopefully not just a weariness with the Portsmouth case as the creditors and the fans deserve more than that.

Keith Harris' bid has been the subject of full due diligence which has been carried out over the last few months. They have fully satisfied the administrators regarding proof of funds.  They have agreed all documentation for the purchase from the administrators and all paperwork with the PFA. The only bit required to complete is the Football League consent.  It is our understanding that the Harris bid could be completed within a matter of seven to ten days.

Perhaps more importantly, this new bid has the support of all members of the creditors committee including the PFA and HMRC. This is because the bid is not conditional upon a very flimsy court case that is highly unlikely to succeed and impossible to complete in time to obtain FL approval. This is because the Court case contains major issues of public policy which will clearly involve appeals to the highest level.  It is this very court case that was forced into an adjournment literally on the court steps in December after the company seeking to acquire Fratton Park pulled out at the last minute on its commitment to fund the purchase.  The PST bid has not evidenced to the satisfaction of the creditors how this would be funded.  It is this funding uncertainty of the PST bid that is the main reason for the multiple adjournments of the court case.

As creditors, we have been told that the individual high-net worth backers of the PST bid had agreed to fund the legal costs of the court case itself as well as cover the operating losses incurred by the club during the court process.  This is a material worry for creditors to the club.  If the PST bid is already struggling to raise sufficient capital for the purchase and now must fund what is expected be a lengthy and costly court battle, there are serious concerns on the depth and commitment of financial reserves those backers.  It is important to note that the 14th February court date is only a scheduling hearing. In all likelihood, the court will not hear the case for before mid-March.  Further, one must consider the potential of appeal on any outcome.  This would only serve to further deplete the financial resources if both the club and the PST bid.

As presented and approved by the creditors, the Keith Harris bid could provide up to a million pounds return to creditors and fully comply with the CVA. The PST bid cannot comply with the CVA and will produce a much lower return to creditors because under the PST bid the majority of the money will go to Portpin.

We have been informed that the PST stormed out of a meeting with PKF when they were told that PKF and the creditors were to accept the Keith Harris bid.  The press reports from Keith Harris make it clear that he also wants to offer ownership in some format to the fans.  The PST ownership structure provides for 90 per cent of shares to be held by 5 or 6 individuals and the rest by the fans. It is these fans that should be voicing their concerns over the real intentions of the 5 or 6 individuals who seem to be happy with the FL statement of "PST or bust". A true fan would want the club saved by proper owners as Keith Harris clearly is.

If the FL fail to change their mind and the club is liquidated, everyone - including creditors, fans, staff, and players - lose out.  We understand that certain creditors may be considering legal action against the FL

Saturday 2 February 2013

Damaging revelations continue for ex Portsmouth FC owner Balram Chanrai



In a bad week for public relations it’s reported that the Nepalese businessman Balram Chanrai has been forced into hiding after a series of highly damaging revelations entered the public domain. Twitter’s information Security Director Bob Lord was today forced into an apology after it emerged the controversial ex-Portsmouth Football Club owner may have been behind an attack which saw 250,000 users’ passwords stolen, as well as usernames, emails and other data. As yet unconfirmed reports suggest that Chanrai was trying to gain access to the account of club fan Mike Hall. Chanrai was sadly unavailable for comment.

On a day of unprecedented bad publicity we take a closer look at some of the stories making today’s headlines from around the world.

Oprah Winfrey earlier today admitted that in scenes cut from her two part interview with disgraced cyclist Lance Armstrong that he had confided in her that it was Balram Chanrai and not controversial trainer Michele Ferrari that had convinced the seven times Tour De France winner that doping was the answer to secure his now stripped titles.  Chanrai was again sadly unavailable for comment.

West Bromwich Albion player Peter Odemwingie has given an exclusive interview to tomorrows Sunday Times in which he says he feels badly let down by his new advisor Balram Chanrai. Embarrassing scenes saw him locked out of Queens Park Rangers’ Loftus Road Ground on transfer deadline day as he tried to secure a move away from the Midlands Club. Chanrai was unavailable for comment.

South Korean songwriter, singer and rapper Psy has given an emotional interview to American blogger and television personality Perez Hilton admitting that he hadn’t sung on the worldwide smash hit Gangham Style. The vocals were recorded by a little known Nepalese born businessman by the name of Balram Chanrai. Sadly for Hilton fans Chanrai was unavailable for comment.

Former HMV Chiefs have blamed the collapse of their high street chain on the digital download success of last year’s biggest hit Gangham Style. Chiefs said there was no way of competing with the competition and success that companies like Apple’s iTunes had gained from the total numbers of sales from downloads compared to hard copy sales. “People don’t want to admit that they’re actually buying a record that is so bad. Today’s consumers can download these tracks in seconds without anyone seeing them buying it and claim to their friends and family that they weren’t one of the millions who brought the track or watched the video on YouTube.” HMV’s problems were confounded after South Korean singer / songwriter Psy admitted that it was a little known Nepalese born businessman by the name of Balram Chanrai who had actually sung on the track. Ex HMV CEO Trevor Moore was said to have banged his head against the wall of his country home for a full 12 minutes before finally collapsing. We have been unable to reach Mr Chanrai for a comment at this time.

Sebastien Coe, Chairman of the British Olympic Association announced the end of their investigation into the ticketing fiasco that gripped the early days of last summer’s London 2012 Olympic Games. Findings have concluded that the empty seats witnessed at many events were down to allocations given to a range of companies all owned by Hong Kong businessman Balram Chanrai. Coe has passed on the details of the findings to Brazils Olympic Committee ahead of the 2016 Games. Chanrai was unavailable for comment on the matter.

Following the highly damaging story about horse meat being discovered in burgers being sold within their supermarkets, Tim Smith, Tesco's Group Technical Director has told reporters “We now understand - with as much certainty as possible – what happened. The evidence tells us that our frozen burger supplier, Silvercrest, used meat in our products that did not come from the list of approved suppliers we gave them.” An investigation by the Ministry of Agriculture in Ireland has found that the source of the horse meat was a supplier in Poland. Those investigations have suggested the company is owned by the ex-Portsmouth FC owner Balram Chanrai. The Hong Kong based businessman has so far been unavailable for comment.










*The contents of this post are of course completely fabricated and should not be taken in the slightest bit seriously