Guardian finds £4m of Portsmouth's cash under the sofa

MementoMori

Oopsie.

Some red faces down Pompey way especially for the administrator.

On the plus side at least it's positive news for Pompey.

Good news for Portsmouth …
Guardian finds missing £4m discrepancy in the administrator's report means that a company listed as being owed £1.99m by the club was in fact in debt to Pompey to the tune of £1.86m
Matt Scott The Guardian, Friday 14 May 2010 Article history

Portsmouth have endured a season of almost unremitting financial gloom, with mounting debts forcing them into administration, wages being paid late on several occasions and players set to be sold. But the Guardian can deliver a rare chink of good news ahead of tomorrow's FA Cup final after establishing the club are almost £4m better off than they thought.

Digger has discovered a surprising discrepancy in the administrator's report, establishing that a company listed as being owed £1.99m by Portsmouth was in fact in debt to the club to the tune of £1.86m.

Listed last month among the club's debts were liabilities totalling £1.99m to Canterbury Europe, Pompey's former sponsor and shirt supplier, which was described as a trade creditor.

But Digger went back to the statement of affairs prepared about Canterbury last September by KPMG after the company went into administration having racked up seven-figure losses on a series of expensive sponsorship deals it had struck with sports clubs including Portsmouth. It showed that, contrary to Pompey being a debtor, the Premier League club were owed £1,862,724.67.

Puzzled by the fact that Andronikou's report into Portsmouth's insolvency last month had transformed this into a debt to Canterbury, Digger contacted the joint administrator.

When asked to clarify the situation, Andronikou told the Guardian: "We have discovered that there is a debtor in our favour so the trade creditor figure will come down quite substantially."

It is highly unusual in any sponsorship agreement for a rights holder to become heavily indebted to one of its sponsors.

Canterbury Europe Ltd ceased trading in August 2009 after JD Sports bought its stock and staff from insolvency but JD is not listed as a Portsmouth creditor.

Digger later asked Andronikou to explain the near-£4m swing but did not receive a response. Nor did Andronikou outline whether the "quite substantial" change in circumstances means Canterbury will now be booked as a £2m debtor in his future reports.

Although £4m is a tiny figure in the context of Portsmouth's £138m debt, it could be highly significant in the club's attempt to exit administration.

It is not expected that HM Revenue & Customs, which is listed in Andronikou's April report as being owed £17.1m in unpaid tax and PAYE, will support his Company Voluntary Arrangement. That proposes that unsecured creditors should receive 20p in the pound of what they are owed over five years.

Every pound a creditor is owed equates to a vote in the creditors' ballot and if HMRC is successfully to block the CVA it must secure 25% of the total votes against the process. Last week Andronikou told a meeting of creditors that the taxman's claim had risen to £35m against total debts of £138m – or 25.36%.

Should the total debt now fall to £134m due to the discrepancy, that would lift HMRC's entitlement in the vote to 26.1%.

Andronikou's past record as an insolvency practitioner has not been without controversy. In December 2008 he was found by the high court to have "failed to meet the standard to be expected of a reasonably competent insolvency practitioner" during an insolvency process.

When Digger contacted Andronikou about this some weeks ago he stated that he had conducted hundreds of insolvencies and only once had his conduct been criticised by the courts.

HMRC declined to comment yesterday and KPMG did not return Digger's call.

http://www.guardian.co.uk/football/2010/may/14/portsmouth-debt-administration-missing-funds