Portsmouth have been given a seven-day reprieve to sort out their financial mess but were warned in the strongest possible terms in the High Court yesterday they could face liquidation because they are effectively insolvent.
The Premier League club have been granted a stay of execution as they fight a winding-up petition that, if successful, would have effects the whole of English football. The end of Portsmouth FC would impact on the title race between Chelsea and Manchester United, and would also hamper Fabio Capello's World Cup plans, as goalkeeper David James would be left scratching round for a new club with the finals in South Africa less than four months away.
Portsmouth's legal team, led by Nigel Hood, attempted to play on the emotional impact that would follow a decision to force the debt-ridden club out of business. But Mrs Registrar Christine Derrett, who presided over proceedings in central London yesterday, would have none of it.
She made it clear that she fears Portsmouth are liable to run up yet more debts and added that she will not be swayed by any appeals to her better nature, saying: "I am very concerned about the financial status of this company. It seems to me there's a very real risk that this company is undoubtedly trading while it is insolvent. I'm 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."
Portsmouth have to draw up a statement of their financial affairs by 4pm on February 17 or will be shut down. The club's representatives have failed to come to an agreement with HM Revenue and Customs over an unpaid tax bill. The club have a VAT bill of £7.4m which it is disputing with HMRC and also owes £4.7m in unpaid PAYE and National Insurance contributions which were not part of yesterday's petition. Portsmouth had offered to pay £1.5m up front with the rest in instalments but the Revenue had insisted on a minimum payment of £4m.
Portsmouth's history of financial mismanagement was laid before the court. Representing HMRC, Gregory Mitchell QC said: "It's quite clear beyond any doubt at all that this company is insolvent. They have failed to provide any evidence at all as to their solvency. There are many debts and they are unpaid."
Portsmouth have the option of voluntarily going into administration which would render them immune from prosecution from HMRC. Portsmouth's latest owner, Balram Chainrai, has said he will not put any more money into the club.
Portsmouth chief executive Peter Storrie remains optimistic. He said: "We could have been wound up so whatever we have got is a bonus. For PAYE we have offered them money that would bring it up to date as much as any club in the country. So that is why we are disputing the claim with Customs and Excise.
"VAT is an issue but that is a dispute and our advisers tell us this could go on for six months or even a year. You have to look at what is happening in the world of football, there are a lot of clubs in considerably larger debt than what we have. Our debt has come down substantially."
Last night Portsmouth issued a statement detailing its position. It said: "The total outstanding on the petition in December was £11.5m. This includes £5.8m of disputed VAT, £1.1m of undisputed VAT and £4.6m due on PAYE and NIC. In relation to the PAYE and NIC, £4.5m has subsequently been paid, leaving £7m outstanding. However, the total amount of VAT included which is subject to a dispute is £7.4m (of which £5.8m has been petitioned for). Therefore we contest that there is no payment due. There was a further submission issued late yesterday in relation to £4.7m, which included £3.8m PAYE. The club is making arrangements to pay this."
Portsmouth's 2008 FA Cup final opponents Cardiff and League One side Southend were also handed stays of executions on Wednesday after facing winding-up orders of their own.
'Pompey deserve to go to the wall' - Fan's eye view
*"Technically in nine days time it could go from really bad doom and gloom to expectation and excitement again, with the hope of new owners who care about our club."
Jason, portsmouth.vitalfootball. co.uk
*"HMRC winds up businesses every day – those that have a much sounder financial footing than Pompey. I feel for the fans, who will suffer, but Pompey deserve to go to the wall."
Myblueandwhiteheart, BBC 606
*"Looking at the revenue side of the equation, I just don't see how this club generates enough to pay back the £60m plus interest."
GWF Hegel, portsmouth-mad.co.uk
*"I can't see anybody buying... it's got THIS far and nobody has yet... I can't see the current circumstances making it more attractive."
Fanchester City, BBC 606