Soccer:Portsmouth were tonight celebrating a significant court victory over the taxman that should see the club back in the hands of Hong Kong businessman Balram Chainrai by the end of this month.
A High Court judge today dismissed a claim by HM Revenue & Customs that it was unfair for ‘football creditors’ such as players and other clubs to have preferential treatment when it came to Portsmouth’s debts being paid.
The ruling by Mr Justice Mann secures the future of Portsmouth and will allow the club to emerge from administration and to be sold again to Chainrai — who initially placed them in administration after seizing control of the club in January in order to recoup a loan.
The judge said the sale of the club could now go ahead and Chainrai is the only realistic buyer.
Chainrai’s representative Ashok Patel said outside court: “We are very pleased with the decision because we are the only purchaser the judge mentioned in his judgment.
“The agreement is being worked on and we hope to finalise the agreement in the next few days.
“Mr Chainrai was very happy because it opens the way for the only realistic solution, which is for his company to purchase the club and stabilise the club and to continue in the Championship.”
HMRC said there would be no appeal against the ruling — their barrister Gregory Mitchell QC had argued Portsmouth’s company voluntary arrangement (CVA) was “unfair and seriously flawed” as it gave preference to football creditors, including players, who were able to claim up to 100 per cent of money owed them, while other creditors including the taxman would receive 20 per cent.
HMRC also lost a claim regarding tax owed on image rights it said was £13million (€15m) more than the £24m (€29m) Pompey’s administrators had valued the claim at.
Portsmouth chief executive David Lampitt said: “We’re delighted and relieved at the outcome announced today in the High Court.
“It’s obviously a massive step forward in the process towards getting this great club back on its feet.”
Portsmouth had claimed if the judge had blocked Chainrai’s attempt to purchase the club, they would also certainly have been relegated from the Championship and gone into liquidation.
The ruling shows HMRC may face an uphill struggle in their court case against the Premier League over the football creditors rule, which is due to be held in October.
HMRC said in a statement: “HMRC is naturally disappointed not to have won this appeal and we can confirm that we do not intend to appeal.
“Our aim when pursuing debt of any kind is to achieve a fair outcome for the taxpayer and we will take this forward in the wider context of the football industry through separate and outstanding legal proceedings over the status of the so-called football creditors rule.
“This is an important and complex judgment and until we have had the opportunity to study it in detail we can’t comment further.” Peter Kubik, one of Portsmouth’s administrator, confirmed that the sale to Chainrai should be done by the end of August and he was the only contender.
“I would like to think we will have sold the club by the end of the month,” he said. “He (Chainrai) is the only man leading the way at the moment.
“Once the sale has gone through, the new owners can start buying players. With the new owners in place the club will succeed.”
Lampitt added manager Steve Cotterill has yet to finalise his plans for the season which starts against Coventry on Saturday.
“Steve has actually been very measured in the way in which he’s approached this and he’s not going to panic buy, he wants to make sure he brings in players of sufficient quality to be an important part of the team for the whole season,” said the chief executive.
“The transfer embargo is not lifted straight away and we’re not out of administration fully yet but obviously it makes our discussions with the Football League and the Premier League hopefully a little bit easier, puts us on a better footing.”