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Monday, 8 February 2010

Week of Reckoning for Portsmouth Football Club?

On Wednesday the High Court will hold a petition hearing for the winding up of Portsmouth.

I believe unless a substantial payment is made this week to HMRC, then it is likely HMRC will press for the company to be wound up.

What options do directors have when faced with a winding up petition? See our guide page here to the options, rules and do's and dont's for directors.

Other than pay up, there are only a few other options. There may still be time to propose a Company Voluntary Arrangement. Other options include taking legal advice on defending the petition (if is not an agreed debt for instance).

If the business IS VIABLE and has a good future then administration is a very powerful means to defined the company against the petition. Administration will “stay” (or postpone) the winding up petition and prevent a winding up order being made and any other legal action (except with leave of court).

The administrator may propose a Company Voluntary Arrangement to protect the business and allow a repayment of debts for up to 5 years. Or it may be sold to a new company or buyers (including directors). See the administration guide pages here.

So, these options will be carefully considered, I am sure, by the directors of Portsmouth in the 48 hours left before a hearing, that could lead to the first compulsory liquidation of a Premier League football club.

My guess? Administration will be chosen, with a view to selling the club/assets/players.

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