Article : Revealed - The true story behind Ali Al Faraj

Ever since the name Ali Al Faraj was first revealed as a potential billionaire owner to an expectant Pompey public, the questions about who he is, what his motives were and even whether he exists have abounded. Today, pompey-fans.com can reveal the truth behind Ali al Faraj.
 

He does exist. His passport was passed to the Premier League in August 2009. The league checked with the Saudi-Arabian embassy and the Saudis investigated and confirmed that Ali al Faraj did exist and lived in Riyadh. He has since been used as the straw man in several small London property deals with Yoram Yossifoff and allegedly been sued by his lawyers in Saudi Arabia for non-payment of fees.

However, there is not one shred of evidence that at any point he exercised control over Pompey.

So who did? Our story begins in 2007 when Arkadi Gaydamak (father of Sacha Gaydamak) purchased a property company, Ameris Holdings, from Balram Chainrai and Levi Kushnir in a deal brokered by Ron Mana and Yoram Yossifoff.
 

By 2008, Arkadi Gaydamak was under pressure with the French courts investigating his involvement in the Angolan civil war and a crash in Israel's property market. The Israeli property market was under assault from two directions: the crash in asset value and the man who had loaned money to several Israeli property CEOs - Shelley Narkis, the King of the Grey Market and Israel's biggest loan shark. Narkis is a convicted extortionist, jury tamperer and is feared throughout Israel. One of his non-motorbike riding, machine gun-toting employees is our old friend Daniel Azougy, debt collector extraordinaire.

In the financial whirlwind which followed, various CEOs fled Israel. Boaz Yona of Heftsiba to a hideout in Italy and Arkadi Gaydamak, who owned Ocif investments, to Moscow.

The domino effect destroyed Heftsiba and OCIF investments, and left Gaydamak unable to finish paying for Ameris Holdings. Arkadi's many many creditors from his Israeli businesses included Ron Mana, Yoram Yossifoff, Daniel Azougy and Balram Chainrai and Levi Kushnir. Azougy was a long time friend of Mana and Yossifoff.
 

Mana, Chainrai and Kushnir were awarded a lien on the assets of Betar Jerusalem, but Israeli insolvency law being very different to UK law, they had trouble extracting any money. In January 2009, Daniel Azougy attempted to convince the Betar general manager to transfer all the club's money out of the club claiming to be working for Gaydamak. A swift phone call to Moscow later, and this attempt to extort money from Betar was quickly and very publicly rebuffed. Azougy got a flea in his ear and no money.

The following month, Azougy and Narkis, visited Arkadi Gaydamak in Moscow to try and get their money back.

As with Azougy's visit to Betar, he came back from Arkadi empty handed.

In September 2008, when his creditors were wrangling over the remains of Ocif, Arkadi Gaydamak had listed Portsmouth FC in a court submission as one of his assets claiming it was worth £300m. It was the Gaydamak family's last known tangible asset. It was deep in trouble, for sale very cheaply and he had just told his creditors that it belonged to him. It was a tempting prize, with tens of millions of TV money due to come into the club and a forthcoming transfer window in which quick cash might be realised.

Just five months after the abortive Moscow trip by Azougy and Narkis, Chainrai, Kushnir, Mana, Yossifoff and Azougy were involved in an attempt to take over Pompey using the unfortunate Ali al Faraj as a smokescreen.

Balram Chainrai admitted to being a close friend of Yoram Yossifoff and transferring £2.5m, 50% of the proposed purchase fee, to Yossifoff in London in July 2009. Although Chainrai claims this was just a loan, his and Levi Kushnir's names were passed to the Premier League as prospective owners by directors of Portsmouth FC. However, Sacha discovered the involvement of his father's creditors, as Peter Storrie later lamented in public, and decided to sell to Sulaiman Al Fahim instead - for £5m and a promise to pay £9m in January 2010 and a further £20m by 2011.

Sacha's suspicions had been raised when the 'billionaire' Arabs Ahmed and Ali al Faraj were able to produce proof of funds of less than £750k, and the answers to questions about what their business interests and 'connections to royalty' were turned out to be 'negligible' and 'none' respectively. Clearly, Ali and Ahmed weren't football takeover material.

However, Ahmed knew Yossifoff from their minor property letting businesses in London, and for the purposes of being the untraceable, uncheckable, unreachable straw-man figurehead, his brother Ali was perfect. A hermit in a country which refuses to allow Israelis in, or even those with an Israeli stamp in their passport. No wonder none of them ever met him.

As all Pompey fans remember, al Fahim's disastrous regime lasted just 40 days before the club ran out of money and was forced into the hands of the five creditors, still hiding behind the "billionaire brothers" Ali and Ahmed al Faraj.
 

Azougy, Mana and Yossifoff had placed their interest in a company called Falcondrone, while Chainrai and Kushnir, according to sources, formed Portpin Ltd through their solicitor Mark Jacob.

Jacob was an old friend of Yossifoff, having worked in a London law firm of his as far back as 1998.

On October 6th 2009, Chainrai and Kushnir loaned Pompey £6m, and according to the evidence given in the High Court in August 2010, were to be repaid £7m in two months, an interest rate that is in excess of 130% APR.

In return they took a fixed charge over the club's major asset, Fratton Park and proxy control over the 90% shareholding in Pompey held by Falcondrone. There was already an unpublicised winding up order in place from HMRC which stemmed from a failure to pay any tax for the last two months, in breach of an instalment plan offered by al Fahim.

A winding up petition automatically freezes the company bank account, so all the initial transactions went via Portpin's client account at Fuglers. Normal practice is for a company to seek a validation order at the High Court to unfreeze the account and allow the company to trade if it can, with the consent of the petitioner, in this case HMRC. That gives the petitioner the right to see all transactions in and out of the account. Normally, the account balance is monitored by the Premier League to ensure football debts can be paid. So using the client account had the effect of limiting scrutiny by HMRC and the Premier League. In this case, HMRC agreed a new instalment plan and withdrew their winding up order.
 

Although the club now had access to its own account once again, the regime continued to do business via the Portpin client account. Mark Jacob had been added to the board on October 5th and Daniel Azougy was given complete control of the finances at what seems to have been the first and last board meeting of the al Faraj era - with Ali al Faraj not present.

Peter Storrie was informed by the regime that he was to deal only with the football side of the business and Tanya Robins was informed, apparently much to her disgust, that she now effectively reported to Azougy.

However, Azougy could obviously not access the Fuglers client account. Only one man could order the accounts team at Fuglers London HQ to transfer money and that was Mark Jacob. And although he had the title of Executive Director of Portsmouth FC, Portsmouth FC were not paying him. Nor were Falcondrone. Only Portpin Ltd paid Jacob, via their fees to Fuglers.

This arrangement meant that Portpin had control over the shares, fixed asset, bank account and executive director of the business. In August 2010, during HMRC challenge to the CVA, Gregory Mitchell QC argued that this amounted to control of Portsmouth FC as shadow directors. The term 'shadow director' is defined in the Companies Act 2006 as a person 'in accordance with whose directions or instructions the directors of the company are accustomed to act'.

So did Portpin ever tell Jacob what to do, and, if so, did he do it?

Well, as was revealed in the HMRC challenge, Portpin wrote to Jacob in December 2009 and demanded a solicitors' undertaking that he send the next Premier League TV payment, which the Premier League were insisting went to football creditors, to them instead. He agreed. However, the Premier League contacted Jacob and, when he revealed the undertaking to them, they directed the money straight to football creditors. The Premier League also placed a transfer embargo on Pompey.

On December 23rd 2009, HMRC once again issued a winding up order to Portsmouth FC. The club had immediately failed to fulfil any part of their new instalment plan, with the tax and national insurance on wages not being paid in October, November and December, let alone arrears of tax, VAT etc. This had the effect of once again freezing the club's bank account. Money can be paid into a frozen bank account, and indeed this is where the club's ticket revenues and merchandise sales continued to go. However, it couldn't be accessed by the club. Had a validation order been sought, the approximately £2m in the club's account could have been paid to creditors, and repaid the small creditors and charities many times over. However, it sat there, unused.

The reality is that while visibly the Premier League appeared to be doing nothing, behind the scenes they were playing a blinder. Their refusal to allow TV money or transfer revenue into the club meant there was no quick way for the five creditors to get the money they were owed by Arkadi back. This is the main reason no players were sold until the end of January, because at any other time the revenue would have gone straight to creditors.
 

In early January 2010, when they realised it was going to be near impossible to recoup any money they had put into Pompey from the TV rights payments or transfers that had brought them here, Portpin asked Jacob to supplement their fixed charge with a floating charge over all the assets, enterprise and monies of Portsmouth FC. This was retrospective, as any money from Portpin had already been and gone. Therefore, this charge is invalid. The reason can be found in the maxim; "past consideration (for a debenture) is no consideration".

To obtain a valid security you need to provide a new consideration (ie you need to lend new money). However, Jacob issued the charge retrospectively, giving them absolute control over everything of value at Pompey. (Jacob's actions were above board here, he issued the charge, but it's not up to him to determine its validity). So when Portpin put Pompey into administration in February 2010, there was a valid fixed charge, but the floating charge was never valid, and has never subsequently been tested in court. The fixed charge should have been released when Pompey came out if administration, as Portpin were given the asset on which it was secured.

However, the rest of their secured debt is a myth, and the January 2011 transfer of the whole £17m charge was plainly invalid and should never have occurred without £17m of new money being loaned to Pompey at the same time.
 

On February 2nd 2010, following the sale of Younes Kaboul and Asmir Begovic to Spurs and Stoke, Pompey were finally up to date on their currently owed instalments to Football creditors. Football rights (TV) payments and incoming transfer revenue channeled directly from the Premier League to football creditors had wiped out the arrears.

This meant that although the club had run up crippling debts during the period to non-football creditors, the club could finally receive the transfer money and the Premier League, bound by their own rule book, could do nothing about it. Portpin saw their chance and requested the money be sent to them by Jacob from the client account and £2m was wired, apparently to Switzerland.

Falcondrone, Azougy, Yossifoff and Mana were furious. Some of whatever sums of money had come into the club also belonged to Falcondrone. From their perspective, Portpin were no longer partners, but rivals for whatever could be salvaged from the wreck of Pompey.

The same day, Azougy sent a forged letter [click here to see a copy of it] claiming to be from Ali al Faraj demanding that Jacob in future only repay money to Portpin with the permission of Azougy. So did Jacob comply with this instruction from the nominal beneficial owner of Portsmouth FC? Of course not. He was a solicitor and his clients told him to transfer more money, so he did. A few days later, a further £2m was transferred to Portpin.
 

Section 127 of the Insolvency Act says that: ‘In a winding-up by the court, any disposition of the company’s property, and any transfer of shares, or alteration in the status of the company’s members, made after the commencement of the winding-up is, unless the court otherwise orders, void’.

As the £4m was transferred to Portpin after the commencement of the winding up order it is highly likely to be unlawful. Baker Tilly are investigating transactions of PCFC Ltd and we await their report with interest. Certainly Andrew Andronikou confirmed publicly to the Pompey Virtual Alliance in 2010 that the transfer would probably have to be reversed as it appeared to fall foul of section 127.

One interesting feature of this controversial money transfer is the situation of Mr Jacob. As a solicitor, he had to be careful which legal persona he adopted, either acting as Portpin's solicitor or Portsmouth FC executive director. Jacob is no schmuck. He knew that if he transferred the money as Executive Director of Pompey, he was likely to be called to account later. But no one can hold him accountable if he transferred the money as Portpin's solicitor, acting purely for Portpin. This would mean that Jacob's higher loyalty to his client took precedence. But he could only transfer the money if a director or appropriate authority acting on behalf of the football club told him to. And an appropriate authority did: the people who really ran the club - Portpin. So it looks like Jacob is rightly free and clear.

So what we have here is a company in Portpin that controlled all the shares, assets, money, bank account and Executive Director of Portsmouth FC. They repeatedly told him what to do and he did it, even when ordered not to by the 'owner' of Portsmouth FC, even when insolvency law seems to prohibit it.

Multiple sources have confirmed that in fact the operation of the bank account leaves little room for ambiguity. In accordance with the Solicitors Regulatory authority rules on the operation of client accounts, Jacob needed authorisation to transfer funds out of the account, from Portpin. What greater level of control could anyone have over a business than the shares, assets, director and payments? Ali al Faraj, controlled NOTHING.
 

In order for a creditor to be selected for payment during this period, department heads submitted lists of who needed to be paid to Tanya Robins. She was then required to hand this list to Daniel Azougy, who would forward it to Jacob and the directors of Falcondrone and Portpin. The list would come back from the shadow directors representing Portpin and Falcondrone to Jacob with asterisks next to those who should be paid. No asterisk, no payment. This lead to the club's website being shut down for non-payment in December 2009, as all the lobbying from the department heads and even nominal CEO Peter Storrie, to have the very small bill paid had fallen on deaf ears. Jacob reportedly said: "I can't authorise it". Storrie apparently paid the bill from his corporate credit card.

In early February 2010 Jacob and Fuglers were 'uninstructed' by Portpin following the discovery of £1.5m in unauthorised payments to individuals who are still unknown. Portpin removed their business to Balsara and Co and Jacob left Fuglers shortly afterwards.

Once again, this is a clear demonstration of control by Portpin over the business. When payments were made from Portpin's client account that they had NOT authorised, action immediately followed.

Sources close to the situation at the time claimed that Jacob was entirely blameless in this and that Azougy, a convicted forger, had created a fax which fooled the accounts team at Fuglers to send payments to a number of still undisclosed bank accounts.
 

Pompey were fined £1m by the Premier League following rule breaches concerning Daniel Azougy during this period. He was revealed as a fraudster and forger in a national newspaper during December 2009, and Jacob was forced to defend the situation in another national newspaper interview shortly afterwards.

Azougy was present in the directors box with representatives of Portpin and Falcondrone including Chainrai, Kushnir, Mana and Yossifoff on numerous occasions during this period and all were seen to arrive together and leave together by numerous sources. Azougy was also responsible for creating fake accounts, which were released to prospective buyers during December 2009 and leaked to The News. These accounts created £40m on Pompey's balance sheet and removed large tranches of debt. They showed a 'Premier League receivable facility £22m' on the balance sheet, to be paid in January and represented as an agreed advance payment of Premier League TV revenues. In fact, no such advance had ever even been asked for and the Premier League told interested journalists in no uncertain terms that they weren't trusting Pompey with any money, let alone advancing them any.

It was the creation and distribution of these faked accounts that apparently lead to Tanya Robins resigning from the board of Portsmouth FC, although she had always been very uncomfortable working with Azougy, who was harsh, abrasive and nakedly corrupt. An eye witness reported a stand up row between Robins and Azougy where Robins told the fraudster he could not do things like that here, and Azougy responded "that's the way we do things where I come from", which probably explains his multiple convictions.

On another occasion, an eye witness also reported that Jacob had to be summoned from his London office, where he was desperately trying to keep his legal property practice going, to Fratton Park to avoid Peter Storrie and Daniel Azougy resorting to a fist fight. Storrie was furious at the way Azougy was controlling the finances and the inability of any director to get a clear picture of the accounts. Jacob might have been processing payments and known what was in the bank account, but the real picture of what was due to be paid or received was kept from him.
 

In fact, whilst history will have much to say about the running of Pompey before October 2009, the picture that emerges from numerous conversations with those closely involved is that Peter Storrie, Tanya Robins, Mark Jacob, Paul Weld and Lucius Peart did their absolute level best to try and ensure the club was run the right way. But they weren't running the club. They had no real say at all.

On 10th March 2010, the Pompey Virtual Alliance and other supporters groups met with Administrators from UHY Hacker Young. Hacker Young said that the amount of debt the club owed was, as yet, impossible to determine because "there was a black hole in the accounts". Administrators demanded this be excised from the minutes or there would be no further meetings, and after much debate it was removed. UHY ended the meetings subsequently in any case. However, it's important that fans know that there are serious question marks over all the financial transactions at Pompey between October 6th, 2009and March 2010, and that this is almost certainly why the Baker Tilly investigation is taking so long.

Despite their history of related business transactions, their close friendships with other members of the group, their close proximity at matches, national newspaper articles and the presence of their own solicitor in the same building, staying in the same hotel and being forced to work closely with Azougy, it remains Portpin's claim that they had no idea what he was doing or what his role was. Their contention that they had sleepless nights worrying about how they would get their money back in 2009 and not knowing who ran the finances just leads to the obvious question: why didn't you ask your solicitor who ran the finances? Why didn't you ask your friend Yossifoff? Why didn't you ask Azougy when you were sat next to him? Are you really saying that his role and status as a fraudster was confirmed in two national newspapers in December 2009 but your solicitor didn't inform you of it?
 

Pompey-fans.com has asked Portpin to comment on the entirety of this article but Portpin "decline to comment".

Ali al Faraj never did have anything to do with Pompey. The people who ran Pompey during this period were Balram Chainrai, Levi Kushnir, Yoram Yossifoff and Daniel Azougy, with Ron Mana more distantly interested. None of them joined the board, but all acted as shadow directors.

The Premier League have always been adamant that anyone who acted as a Shadow Director during Azougy's tenure at Fratton Park would not be a fit and proper person. At every stage, Portpin's man on the board obeyed their instructions on key financial matters. There is no room for doubt that they were shadow directors.

Ali al Faraj has as much to do with Pompey now as he did in 2009-10. The reality was that lurking underneath the Arab khefiyeh of Ali al Faraj were Balram Chainrai and Levi Kushnir; creditors of Arkadi Gaydamak, who came looking for his assets and have since refused to leave.
   
Micah Hall is a Portsmouth supporter who blogs regularly at FansNetwork (access an archive of his work here) (He’s on Twitter here)
 
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Why PFC owe Portpin absolutely nothing...

On Friday 17th February 2012 Justice Norris appointed Trevor Birch as Pompey's administrator. In doing so he questioned why Portpin held a debenture over Pompey at all. It's a very good question.
 

A debenture is just a mortgage by another name. Portpin loaned Pompey £6m on October 6th 2009. They took a charge on Fratton Park for £7m, which is the oft referred to value in the Land Registry. (That doesn't mean it's worth £7m, it just means it secured up to £7m of loans). Source: Companies House

In January 2010 Portpin took a further charge on "all the assets, monies and enterprise of Portsmouth Football Club" to the value of £17m, so effectively Portpin were claiming to have loaned a further £11m in November and December. Source: Companies House
 

For the purposes of this article, I'm not going to dispute that, as no one has ever produced audited accounts to prove it one way or the other.

It would seem to me the biggest problem with the charge comes when Portpin 'bought' Pompey out of administration in October 2010. It's complicated so stick with me. 

At that time, Pompey were in administration and for sale.

Portpin bought Pompey from administration in October 2010 and my understanding is paid for the club by swapping it for their debenture. The alternative would be Portpin would have been given the club for free. In other words, it's a bit like you not paying your mortgage (in this case PFC hasn't kept up its loan repayments) and the bank (in this case Portpin) takes your house in return.

Portpin had already taken (or in effect been paid back by PFC) £4m in February 2010, and Andrew Andronikou agreed with representatives from the Pompey Virtual Alliance at a meeting in April 2010 that this needed to be deducted from the £17m debenture, leaving "around £12.8m, call it £13m" to quote Andronikou.
 

So Portpin effectively swapped their debenture on Portsmouth City Football Club Ltd for the assets of PCFC Ltd, ie they repossessed it. So what assets did PCFC Ltd have, what was it worth?

Well, Fratton Park at their security valuation of £7m – Source: Title Number: HP375034.

He also inherited the debt from Miland Property to PFC2010 Ltd of around £4m - this was the entry in the books which Miland should have, but did not, pay for the land around the ground. Any outstanding debt is an asset, and there is an ongoing investigation into this transaction by Baker Tilly aimed at recovering the money for PFC2010 Ltd.
  

After paying the CVA there was a further £2m of excess parachute payments. This is an asset of the new company.

All player contracts are an asset of the new company. Let’s be ultra-conservative here and value them at £2m. This doesn't include possible transfer fees.

Then add in £500,000 for the fixtures and fittings of Fratton Park, logo, intellectual property, TV rights payments - again an ultra-conservative valuation. I've even decided to omit the revenue from 10,000 season tickets, running into millions, from this equation.

So add that up. Assets of PFC2010 Ltd in October 2010 were conservatively around £15.5m.

So in return for a charge of £13m, Andrew Andronikou it appears sold all the assets of Portsmouth City Football Club Ltd to Portpin's new company, PFC 2010 Ltd in return for the debenture.

The question then, is if the value of the assets (£15.5m) exceeded the value of the charge, (£13m), why would there still be a charge of £17m? Surely, Portpin should have been paying an extra £2.5m cash to own PFC 2010 Ltd, not keeping £17m of secured debt?

 
Roll forward to January 26th 2011, and the Transfer of fixed and floating charge of 7th January 2010 to PFC2010 Ltd. Source Companies House.

The whole £17m Portpin charge which should, in my view,  no longer exist, is transferred from oldco, (PCFC Ltd) to newco, (PFC2010 Ltd) by Andrew Andronikou, and accepted by whoever on the board of PFC 2010 Ltd thought accepting £17m of debt for apparently nothing was a good idea. The board of PFC 2010 Ltd at the time included Deepak Chainrai and Levi Kushnir, who coincidentally are directors of Portpin. No doubt they excused themselves from the transaction owing to the apparent conflict of interest.

So what we have here is the equivalent of a bank repossessing your house, selling it for above market value and then telling you that you still owe them the entire amount of the mortgage which is now secured on your new house. 

As the tale winds on it becomes more inexplicable. CSI Ltd bought Pompey, and when CSI was put into administration, by Portpin, Portpin created a new charge of £17m on CSI Ltd, while maintaining the old one on PFC 2010 Ltd. Source: Companies House

It's no wonder the judge was perplexed. I'm perplexed. So the new deal seems to be that the Football League are allowing Portpin only £5m of secured debt, which is still not bad considering PFC apparently don't owe them anything.

 
If you look back at the October 2010 transaction in the light of the Football League’s ruling, the only way it makes sense is if PCFC Ltd had no assets at all, no stadium, players, contracts etc. But if that is true, how can you transfer secured debt to a company with no assets? Either PCFC Ltd had enough assets to pay off the charge when Portpin took us out of administration, or no assets at all and therefore nothing to secure the new charge in January 2011.

Portpin have agreed to pay unsecured creditors of PFC 2010 Ltd and PCFC Ltd a total of £500,000. Now CSI Ltd are owed £10m....by PFC 2010 Ltd, in return for all those players CSI bought that PFC couldn’t afford.

As creditors of newco, CSI get 2p in the pound as opposed to £0.04p in the pound for oldco. So of that £500k, CSI will get £200,000. Portpin are the secured creditors of CSI. So that £200k will go from Portpin to CSI to Portpin again.

Moreover, Portpin have made an offer to pay the creditors, but that offer apparently includes no new money coming into the club, just old debt. So who will pay the £500k? Portsmouth Football Club apparently. Once we pay the £500k from our revenues to our creditors it will, if Portpin's bid is correct, go down in the books as a debt PFC owes  to....Portpin.
 

So the net effect will be that in paying CSI £200k PFC will be giving £200k to Portpin but still owe them £500k plus interest.

All of the above is complex and for all I know is entirely legal and above board. The forthcoming Baker Tilly report should answer at least part of that question.

Portpin's PR company was contacted and given the opportunity to review, comment upon and correct any inaccuracies in this article. A spokesman said: 'Portpin decline to comment on this story.'

Micah Hall is a Portsmouth supporter who blogs regularly at FansNetwork (access an archive of his work here) (He’s on Twitter here)
 
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Article : The shape of Pompey's future debate...

The article below has been written in response to the following blog by P M Ryder Esq. It can (and should) be read here first to set the context.
 

It is a very well written and thought provoking blog which helps to further the debate.
 

My response would be as follows:-
 

During the period October 6th to February 10th 2010 Portsmouth FC operated entirely from Portpin's client account at Fuglers. The club's bank account had been frozen. Normal practice is to seek a validation order to unfreeze it. Preparations were twice made to so this but halted literally at the last minute by Daniel Azougy. When a validation order is obtained, it allows the company to trade normally but also allows the petitioner, HMRC, to see what comes in and out of the bank account. Clearly, rather than seek a validation order, Portpin decided to opt for using their own client account. This was described in the High Court as incredibly unusual, particularly as there was £3m in the bank account which would have paid all the small creditors many times over.

Access to the bank account was controlled by their solicitor, Mark Jacob who also held proxy control over 90% of the shares from Falcondrone, and had given Portpin a charge over the assets of the club. Portpin were the only people paying Jacob, Portsmouth FC did not, nor did Falcondrone. Following a decision to release money to members of Falcondrone (£1.5m according to sports journalist of the year Paul Kelso in the Telegraph), Fuglers were fired and the club's bank account moved to a similar arrangement at Balsara again by Portpin - their lawyers, their bank account.
 

So between October 6th 2009 and February 28th the club's income and outgoings were controlled by Portpin's solicitor who was running the club with their express written consent and presumably their authorisation for transactions from their bank account - there is no way a solicitor would transfer money from a clients account without a written authorisation to do so - hence Fuglers being fired when an unauthorised payment was made.
 

What has this got to do with the small creditors? Well, on February 2nd 2010 Jacob transferred £2m of the Kaboul money to Portpin, despite the fact that there was a winding up order in place - which is illegal under section 127 of the Insolvency act which prohibits the removal of assets once a petition is in place without the approval of the court. On February 2nd, Daniel Azougy wrote to Jacob pretending to be Ali Al Faraj and demanded no further transfers take place to Portpin. On February 8th Jacob transferred another £2m to Portpin. Only after it w'as discovered that £1.5m in payments had been made that Portpin had not authorised was the bank account moved.

 

So during that entire period Portpin controlled the club's finances. This is the period during which we were supposed to pay the charities and during which the majority of debts to small creditors had been run up - because whatever anyone says about Gaydamak, rightly, he did not sell the club with a mass of unpaid bills to trade creditors and charities.
 

So Portpin could have sought a validation order and paid the small creditors from the club's bank account which contained the club's money. They could have selected those creditors for payment and paid them from their bank account. They could have taken less than £4m out of the club and paid them. They didn't. This was opportunity one to pay the small creditors, when their claims initially began to press.

Opportunity 2 came when Portpin promised to pay them in the CVA. They made a massive PR splash of their promise to pay. During ten months of ownership they didn't do it.
 

Opportunity 3 came when CSI challenged them to pay. Instead Portpin elected to take the matter to arbitration and were successful in forcing CSI to take the legal burden of responsibility.

Opportunity 4 came when they put CSI into administration and took control of the company and its assets (Pompey) appointing the administrator Andrew Andronikou who had incredibly omitted to include any timescale for payment of small creditors in the cva. Despite Portpin having gone to law to force CSI to take the responsibility for payment, they were markedly less keen to pay after assuming control of CSI.

Opportunity 5 comes in the CVA offer to creditors offered by Portpin currently. Instead of taking this final opportunity to pay the small creditors, they opted instead to pay them the very small amount described in the blog.
 

The point about paying the players £8.6m is further cited.

The trust had no intention of making such generous settlements to players. They set aside a £2m pot to pay them. The remaining £6.6m would have been used to pay creditors and rebuild the club. However, Portpin had an outline deal and contract of sale back in July. They set the figure of £8.6m that Trevor Birch worked with. The trust clearly communicated to Birch in July that it would be prepared to pay only £2m. Birch negotiated compromises using the Portpin figure, not the trust one, because the trust had not provided proof of funds at that point.
 

Now when Portpin pulled out, PCC offered to loan the Trust £1.5m. Birch faced having to renegotiate the compromise agreements with the players. When Portpin returned to the table, falsely claiming to have been asked to do so by Football League, PCC, PFA and PKF, at a stroke they wiped out £7.5m of trust funding. The loan was conditional on there being only one bid and now the Trust would have to meet the player compromises if they wanted to stay in the game.
 

The Trust managed to do this. They leveraged the development opportunity to solve the ownership problem.

As for financial viability: the Trust has access to a large pool of cash funding - which probably amounts to something like £7m. I don't know precisely because I'm not part of the bid team and you don't negotiate by placing your cards on th table face up. £11m parachute payments plus £7m =£18m.

The Football League have approved the Trust's business plan. PKF have approved the Trust's business plan. The decision purely rests on which deal offers the best for creditors. Financial viability of both bids has been certified.
 

As I understand it, as the parachute payments, CVA offer and compromise agreements to players are the same, the bids are more or less the same. There are two key differences:

1. The Trust is offering Portpin £2.75m to release their charge. However, Portpin intend to transfer £5m of secured over to the club. Now although this isn't money, it has a value. Portpin are therefore offering to pay themselves more, and that, legally makes the whole thing arguable.

2. The Trust cannot sue anyone without approval from its members, who appear very much against the idea of using pledge money for legal action, although the high net worth individuals will probably have something to say about it. So only one party is near certain to resort to legal action. Although Portpin's legal action would have limited prospect of success it would drain the money in the club's bank account, making PKF liable for any losses. So other creditors would be be able to sue PKF for not selecting Portpin and draining their available funds by selecting the Trust.
 

So there are a couple of key points to remember here about financial viability. The trust's bid is every bit as financially viable as Portpin's and is demonstrably better for the club. Portpin's bid offers zero investment, £5m secured debt and an interest bearing overdraft. The trusts bid injects the money from the HNW individuals and pledges directly into the club and would represent the largest cash investment in Pompey for decades.
Secondly, the finance being offered by the Trust comes from Pompey fans, many of whom have made eye watering sacrifices to offer it because they love the club. It is highly relevant to discuss here Mr Chainrai's promise to spend whatever it takes to get to the Premier League. It's the second time he has made this promise. The first time he signally failed to spend a penny piece, in fact our squad lost key players at key times when promotion was an outside chance. If Mr Chainrai intended to invest this money into the club he could have included it in his offer document. He didn't - shame because that, unlike interviews to the BBC, would be legally binding. Had he put such an offer into his bid this would have been over weeks ago because the Trust can't match large scale investment in players. Still, it's a moot point, because less than 24 hours later Mr Chainrai was denying giving the interview at all. Another handy promise of largesse left on the record but denied, rather like the PR emanating from the Portpin camp that he never in fact promised to pay the small creditors, it was a mistake in the document. And in all the interviews he gave as well apparently.

 

As for Twitter, pack mentalities and so on; well a couple of points to be made here as well. The first is that I've received a lot of personal abuse from people who believe in Fahim and Portpin - this is not a one sided thing. Secondly, there is a large majority passionately in favour of the trust and passionately opposed to Portpin taking over. Now if you wish to discuss these things on public forum then be prepared to get the views of others, passionately expressed as football fans do. If the weight of opinion is so large that you feel it to be oppressive, well this simply suggests you are in a small minority.
 
Personally, I'm a vegetarian lib dem Buddhist and I quite often find my views on various topics are minority opinions. Now I'm faced with a choice here, I can either post my thoughts on a public forum and deal with the brickbats from the majority who don't share my opinions, or I can shut up, or speak to like minded people somewhere else. That's what free speech is. It doesn't enshrine your right to air your opinions publicly without challenge or argument, or even contempt and condemnation. It enshrines your right to say it, not to say it with impunity.

I hope this is a helpful response. People will no doubt contend there is Portpin bashing here. Yes. There is. They are the other choice to run the cub.
 

The Trust certainly does not envisage a Taliban style approach to community ownership. It doesn't preclude the possibility of working with investors who share its aim and objectives. The example of Swansea is a great one. The Trust will inject millions rather than £100k. If it can find an investor or investors willing to buy 80% of the club, then that offer would be out to members. The members could opt to take a possible profit on their shares or see new shares created and see the millions of purchase money go straight into the club.
 
Providing the investors were long term ethical investors and not short term speculators hoping to gamble on promotion and leave us with the bill that would be great. And all done democratically and transparently too.

However, no such investor has arrived yet, other than the HNW individuals. That is because no one, but no one, wants to get involved in buying Pompey if they have to deal with someone who wants an unrealistic sum and one day says they want to leave and are reluctant and the next says they are committed and want £12m. We have to get the club first, then make it open, transparent, build the crowds and fanbase and get a stadium and development project up and running. That gives something that people will invest in. Portpin have been trying to sell Pompey for three years and found one person willing to pay their asking price - and true to form they were bankrupt within six months.
 

This is a good debate and should be continued.

Micah Hall is a Portsmouth supporter who blogs regularly at FansNetwork (access an archive of his work here) (He’s on Twitter here)
 
Find out more about the Pompey Supporters’ Trust
 

Article : White Knight Syndrome Conflicts Pompey

What have the following all got in common? Suliaman Al Fahim, Laurence Bassini, Balram Chainrai and Levi Kushnir? Apart from the fact they all seem intent on bringing joy to the hearts of the Fratton Faithful by throwing money at Portsmouth Football Club? For it seems there has been a virulent outbreak of ‘white knight syndrome’ among aspiring football-club owners down Pompey way.

If the 100 controversial owners series currently running on this site doesn’t contain five Pompey owners at the top of the list already – what’s the betting that by the time Ian gets to it, that top five will have all had a go at buying the club? Serial fantasists, insolvent property developers, invisible men, Mafia targets, fraudsters, de-frocked lawyers and human rights abusers have all had a finger in Pompey history since August 2009, along with a wide range of inept businessmen.

Pause to fight the wave of despair induced by the constant underestimating of football fans that such characters seem to indulge in.

Ten days ago Ian King outlined the new bids for the club. Today, the unlikely advent of either Fahim (no proof of funds, not deemed Fit and Proper) or Laurence Bassini (ditto – reported to have put in a bid, described as ‘not a game-changer’ by the administrator, on Tuesday) taking over the club raises a number of suspicions. It needs to be clear that both these bids are an irrelevance in the current ownership battle although both were attractively phrased in terms of the returns for the creditors – particularly secured creditor Portpin – and led fans into the realms of ‘money for players’ dreams again.

Suspicions were further aroused in the strangely-broken statement of plans by Portpin late last night (Tuesday 18 September). Why Portpin should chose the medium of a community radio station with a reach not far beyond the island of Portsea itself is a conundrum. Why their statement is one that represents the biggest volte face since Brutus turned on Caesar is a more interesting one. They appear to have turned from oft-stated ‘reluctant owners’ to enthusiastic football club developers in the last week. One wonders if they are afraid of the opposition as it is possible that the Trust are getting very near to ‘preferred bidder’ status.

However, there are a number of worrying things about the current state of flux at Pompey which have wider implications for the Trust movement. On Friday last week the Pompey Supporters Trust had its bid to buy the club out of administration passed to the Football League. The bid is in direct competition with that of Portpin – the company that holds secured creditor status on the club. Both bids have received a contract of sale from Administrators PKF.

If the Pompey Trust (PST) succeed in buying the club it will be an enormous victory for the Trust movement in English football. It will be the biggest single buy-out attempted by a Trust so far. It will place the idea of a football club at the centre of the business rather than the idea of football as a business. As such it will be a small step towards the slowly swelling tide of change in in the English football governance model.

Currently the success of that bid rests with the Football League. They have already made stringent terms for PFC retaining the ‘golden ticket’ that allows them to play in the League. Over the weekend it transpired that they did not feel that either bid was completely satisfactory, despite the opinion of PKF. The League was seeking greater assurances. I suppose we have to be grateful that they are taking pains, but we thought they were doing that in October 2010 and look what happened after that.

The hurdle the League have put in front of the Trust is one that requires proof they can guarantee the necessary payments required to meet the Football Creditors’ Rule. PST have matched Portpin’s compromise offer to football creditors – mainly players – of £8.5m over four years. £8m of parachute payments are due to the club over the next two years in addition to a recent £3.4m payment that sits in the club account waiting for the new owners. However, despite this, the League want a bank guarantee or company guarantee to prove funds are available to pay the football creditors bill. The Trust is a brand new company with the sole function of running PFC, should they take over. So they are in no position to provide such guarantees. This nudging of the goal posts by the League, were it to prove to be a valid requirement which PST are disputing, could prevent any clubs becoming community owned in the future.

Meanwhile, Portpin have their own problems with the Football League. With many fans suspicious of their intentions toward the club, particularly in the light of their on-and-off bids – the timing of which seem to match the payment of the above mentioned £3.4m, there are still issues regarding the level of debt Portpin are proposing to transfer into the new company. Portpin have been told they can only transfer £5m of the £18m they claim to be owed – money for which they hold a charge on Fratton Park. It is this charge that is the obstacle to them receiving the green light from the League. You have to ask therefore if Portpin are seeking to challenge the value put on the Trust bid for the ground?

The realisable value of the charge is dependant on the value of Fratton Park. The Trust’s valuation has been made independently and has led them to offer £2.75m for the release of Fratton Park into their ownership. Portpin have not had the ground valued. But they have received two other offers, from Fahim and Bassini, neither of whose bids are under consideration. These bids could be claimed to represent genuine market value, however. Interestingly Bassini is being represented by Andrew Andronikou, the administrator of PFC in 2010 who sold the club to Portpin.

Portpin have already been critical of PST in the media. Interesting then that they should slant their late night statement to incorporate PST strong points regarding community, stability and stadium development. But no matter how they dress it up the clearest indication came in the central phrase of the polemic. ‘Do not judge us on our words but on our actions. Portpin is looking to take decisive steps to deliver this objective. We are offering a multi-million pound, multi-year overdraft facility to The Football League to give the business a cash flow safety net and ensure all unsecured and football creditors are paid.’ Indeed these are the actions of Portpin since 2009, actions that provide an overdraft facility that keeps the club indebted to them. Overdrafts, of course, bear interest. Interest that increases debt.

It condemns the club to return to the broken model of governance that Supporters’ Direct describe as a ‘a chronic and deep-set financial instability,’ owing more and more to their owners. How long before this becomes unsustainable again?

No matter how much Portpin dress this up with promises of new infrastructure, building the club ‘back up to its rightful place,’ future stability and a future of happiness over the rainbow it cannot free the club from the need to generate more to feed their needs than it would under community ownership. It is a model built on sand.

Portpin’s track record is not good on this. As property developers they would be shareholders first and foremost in any enterprise that supports PFC. It is almost as if they have come alive to the potential in a project for which they promised exactly the same outcome in 2010, when they claimed ’they are here to bring much-needed stability to Portsmouth Football Club,’ and promised ‘ integrity and 100 per cent transparency.’ So stable did they make the club that they sold it on to an alleged fraudster whose funds were frozen within six months of purchase, leaving the club not only owing Portpin £18m still but also adding another £10.5m to the load of debt. Throughout their tenure they showed no inclination to engage with fans – such was their interest in the community of the club.

In the new statement fans, some nicely titillated by the putative bids of Fahim and Bassini, are dangled promises on a stick that history tells us are unlikely to be filled. It seems a sign of desperation that Portpin are using the much publicised advantages of Trust ownership to dress their debt-laden offer.

Meanwhile, the Pompey Supporters Trust continues to work quietly and professionally towards their target. The superiority of their claim rests in the fact that the fans hopes and wishes for their club will not be subject to the whims an some owner more interested in his percentages than in the ambition to run a Proper Pompey football club. The investment of time, money and passion will go into the club and not continue to be drained out as has been witnessed at Pompey since 2009.

It is time for the Football League to find the courage to make the ethical choice and move the governance of football forward, not leave it in a perpetually sinking spiral of financial failure fuelled by the broken promises of media hype and fantasy.

UPDATE: As this article was published it was announced that both bids appear to have passed the Football League test, although the Owners and Directors Test is still to be taken, The League have bravely batted the decision back to PKF.

S J Maskell article for Twohundredpercent

The Pompey Trust is still taking pledges to back their bid. Information can be found here

You can follow SJ Maskell on Twitter by clicking here.

You can follow Twohundredpercent on Twitter by clicking here.

Article : "Pompey fans, get a grip..."

A post on a Pompey message board caught my eye on Sunday morning. 'I won't be paying a score to watch that rubbish again for a long time' it read. As the Pompey Supporters' Trust bid to buy the club is on the cusp of being successful, it is a timely slap around the chops to remind all concerned with that venture of just what they are letting themselves in for.

After the heady first afternoon of the season, when Fratton Park officially had a shade under 18,000 in the ground against Bournemouth, the attendances against Oldham (circa 13,000) and Walsall (circa 12,000) have been disappointing to say the least.

However, they underline the fickle nature of Pompey's support. This is not a new thing. Older fans will recall the 1960s and 1970s when for a 'big' game Pompey could pull in 30,000 plus. That was somewhat at odds with the general average in the old Division Two, which was sub-10,000 in the 1972-73 season.

If PST becomes the new majority shareholder in Portsmouth Football Club in the next few weeks there will almost certainly be a bounce in attendance as those fans pledged not to return to Fratton Park until the ownership situation is resolved come back to the fold. The problem is that those returners could well be offset by those who see 'supporting' Pompey as a 'value for money' leisure choice. In short, if the team ain't winning, they won't go.

Which brings us to the current team and, in particular, manager Michael Appleton.

It was Napoleon who stated he would rather a lucky General than a good one. In Appleton we have the makings of a good manager, but luck is something his embryonic managerial career has been short of.

He arrived at Fratton Park in November. After just one match saw whatever ground he had beneath his feet cut from him as Pompey's immediate future was put into grave doubt as club owner CSI were put into administration. From that moment he has been running to stand still. Some fans felt he 'should have done better' with the squad he inherited from Steve Cotterill. The stats suggest for a couple of months he did about as well as his predecessor, in infinitely more trying circumstances.

By the end of February, many of Cotterill's squad had been scattered on loan to save cash, ten points had been docked as Pompey went into inevitable administration and Appleton was forced to fight a relegation battle with a selection of loans and short-term contracts. He made a reasonable fist of a bad job, with some memorable results, (Birmingham, Southampton and Doncaster for instance) offset by some woeful collapses (Burnley springs immediately to mind).

So what of Appleton's summer? The ongoing financial uncertainty meant he has been unable to sign a permanent squad. Preferred targets have been signed by other clubs. That Appleton has persuaded the players he has to stick with Pompey so far is a testament to his persuasive powers. The team which faced Bournemouth largely put pen to paper less than 48 hours before the big kick off and remain on month-to-month deals. Injuries, suspensions and even international call ups have robbed him of the chance to create a settled team as he juggles the Football League's loan regulations to hold together a shoestring 20-man squad. Bare bones, indeed.

So one might imagine that every Pompey fan worth his salt might have cut Appleton and his squad a degree of slack. In results terms, it has been a disappointing start. The first half performance at Carlisle and the second halves against Oldham and Walsall have been very poor. That said, we played well at Colchester and Crawley throughout the game and killed off the latter ruthlessly when reduced to nine men.

The worrying thing is the narrative of the players at Appleton's disposal seems to have become fixed, none more so than in the case of Izale McLeod. Here Pompey have a striker with three goals in six games to his credit, two of them, against Crawley and Walsall, excellent finishes. And yet for a significant proportion of fans he is already dismissed as, technical term, crap. The ironic cheers in the second half when McLeod won a header during the game against Walsall were as shocking as they were unwarranted.

I could go on. Mikkel Andersen can't stop long shots. Liam Walker only has a left foot. Josh Thompson is Bambi on ice. Luke Rodgers eats babies. OK I made the last one up, but you get my drift.

Portsmouth Football Club is in intensive care and on life support at the moment. Our sporting objective this season is to stay up, especially if the Football League ten point deduction kicks in as expected. If he achieves that, Appleton should be in contention for Manager of the Year.

So Mr-message-board-I-won't-waste-my-money-on-Pompey this is a slap round the chops back. What will cure Pompey in the long-term is you, and thousands like you, spending your hard-earned cash on PFC when it needs it most. Instant gratification it won't be. It is unquestionably the definition of a true Pompey fan, however.

Colin Farmery

Click here to support the Pompey Supporters' Trust bid.

Article : How the right property deal could secure Pompey's future

Anyone interested in the development of Pompey has two main priorities: to gain ownership of the club and to ensure it can be built into the sort of club we all want it to be. The best way to do this is to kill two birds with one stone. To that end the PST are working on pulling off an elegant and creative solution.

Over the next 20 years, financial fair play will restrict clubs to spending only a percentage of their turnover on players. Owners will find it harder and harder to subsidise clubs beyond their means. Once the distorting effect of parachute payments are taken out, our turnover will be dramatically lower than anyone we hope to compete with. In other words, we will be toast, consigned to the lower divisions for ever. Pompey have to build a new future with bricks and mortar and solid, long term thinking.

We need a minimum of 30,000 seats and substantial hospitality and external revenue to be able to compete.

If we are to build a stadium, it's going to be in conjunction with a property developer. The land around Fratton Park represents a rich opportunity to do something exciting and ambitious, to build a new urban centre with retail, hotels, conference centres and so on. But without a stadium you can't do it, and that is why so many developers have been courting the Trust. They all know the Trust are the ones with a long-term vision for Pompey.

So the Trust are thinking of how they can use a long-term vision to enable the key goal of owning the club to be achieved. And here is the creative bit. If you can persuade a developer to put in the money to fund the purchase of Fratton Park, the club can transition to ownership by the community and the whole process of transformation can start.

People are nervous about the idea of a property developer having any kind of ownership or charge on Fratton Park. Whilst that is natural, the sort of deal the Trust are trying to create is one that is hemmed in with enough safeguards to satisfy any lifelong fan, which is what they are.

The general idea would be that the developer advances the money to buy Fratton Park and gives PST a long-term lease. PST would pay an affordable annual rental. If the rumours are to be believed this could be at an annual rate around what Portpin were proposing to charge the club each month.

The lease would include a buy back opportunity at a set price, which obviously over years becomes steadily cheaper.

So the net effect would be a Pompey that was paying a tiny amount of its revenue on the stadium, freeing up funds to stabilise the club and pay off creditors. Once the club is stabilised within five years or sooner, there are a couple of possibilities: the first is that the development is getting off the ground, and Pompey are handed a large sum of money, ownership of Fratton Park and building starts. The second is that the developer had failed to get the development off the ground, and PST can then use the freed up funds to repurchase the ground at whatever point suits us.

Let's not forget the most important thing of all here: without a stadium, the redevelopment can't happen. Without a redevelopment, no property developer makes money. Until a stadium is built, or being built, there is no redevelopment, no supermarket, no hotel, no nothing. Fratton Park and surrounding land remains protected to the hilt, courtesy of the far-sighted leadership of Portsmouth City Council.

All talks as I understand it remain at an early stage. However, the fact that they are even taking place tells you two very important things: The PST has the long-term interests of the club at hear; the vision and business savvy to build a new Pompey. Secondly, the fact that so many developers, including major development companies with a long track record of building big, successful projects, want to talk to the Trust tells you that once the shackles of the past are off. The Trust can bring business bucks and know how together with fans' passion and loyalty to turn Pompey back into the footballing powerhouse we once were.

There is a lot of fear, uncertainty and doubt being spread by people who are desperate to find any way to discredit the Trust. They aren't having much success. The Trust continues along their stated, consistent road, progressing quietly and professionally to rescue the club from speculators and opportunists.

What these talks represent is the first step on a journey that will one day see a new stadium rise above the Fratton skyline and a Pompey that investors are eager to be part of. The Trust are not just keeping their eyes on the prize: they have one gleaming eye on a big future for the club.

Micah Hall is a Portsmouth supporter who blogs regularly at FansNetwork (access an archive of his work here) (He’s on Twitter here)

Find out more about the Pompey Supporters’ Trust

Article : The choice facing administrator Trevor Birch

The long saga of Portsmouth football club’s turbulent ownership drama is set to reach a climactic denouement this week, as administrator Trevor Birch chooses between bids from former owner Balram Chainrai and the Pompey Supporters’ Trust.

If the Trust succeeds in taking control of their long-suffering club, it will become the largest community owned club in the country.

During Pompey’s meteoric rise to the Premier League and FA Cup winning glory, and their equally cataclysmic descent into the lower leagues, the one constant for press and public has been the supporters: loud, passionate and fanatically dedicated on the field, quietly professional and determined off it.

Pompey Supporters Trust was formed in 2009 with the express intention of taking ownership of Pompey out of the hands of speculators and rebuilding the club.

Since Sasha Gaydamak’s regime had their money supply choked off, the club has seen a procession of colourful characters come and go, leaving the club perennially bankrupt and somehow in debt to them all.

They took the risk and we paid the price.

There is a lingering perception that Pompey somehow got away with something.

In fact 29 points have been deducted, two bankruptcies and two relegations have followed. Pompey have no players barring the handful signed in desperation on one-month contracts to ensure we actually had a team to take the field.

Our youth prospects have been sold for a pittance. The crucial development land needed to rebuild dilapidated, crumbling Fratton Park has been lost, a casualty of the bickering between squabbling former owners.

‘Got away with it’ to Pompey fans sounds a bit like “crucifixion's a doddle”.

Which brings us to the present. Portpin, the company owned by Balram Chainrai and Levi Kushnir, came into the Pompey saga in 2009, when they made what might be the worst investment decision in the history of Pompey, or possibly, the world.

They decided to lend £17m to Ali Al Faraj, a man who they had never met and who may not even exist. They admitted their motivation for this was to make a short-term profit.

Of course, the money was immediately consumed by the roaring flames of debt that were licking around the club in full view of the world.

(Image by kind permission of www.portsmouthfc.co.uk)
PKF's Trevor Birch

What induced Portpin to loan money to a bankrupt football club is a matter of speculation. What is certain is that their money is gone. Twice they have taken ownership of Pompey using their secured debt: twice they have walked away with even less money. So now they seek a renewed ownership of Pompey. Or do they?

They equivocated publicly about whether they would once again seek to resume ownership. Eventually, predictably, they submitted a bid. Following the reaction of supporters they withdrew it again, citing “the negative reactions and criticism of fans”.

Jubilation exploded across the internet. Hundreds of season tickets were sold the following day, taking the total over 8,000. Almost 18,000 fans watched the season opener against Bournemouth, despite most buying tickets when the club had no players at all.

Celebrations were abruptly cut short when the following week Portpin claimed to have been invited to resubmit their bid following discussions with Portsmouth City Council, administrator, Trevor Birch, the Football League and PFA.

Portsmouth News reporter Emma Judd swiftly debunked this claim using the phrase, “they all roundly denied it”, and the hard pressed Pompey fans again showed their wit and chutzpah by ensuring the twitter hash tag #THEYROUNDLYDENIEDIT was trending in the UK.

So now Trevor Birch is left on the horns of a dilemma that must make him look back fondly to his days as CEO of Ken Bates Chelsea, when all he had to worry about was beating Liverpool to the Champions League or going into administration.

Of course, the criteria for making this decision are not football ones or the answer would be obvious. Surprisingly, however, the business decision is just as obvious: Portpin’s ambition is to somehow get their money back within three years according to Levi Kushnir.

The fact that Pompey are worth £2m, have no players, a 10-point deduction and Portpin intend to operate on a League 2 playing budget of £1.5m hardly suggests any obvious or reasonable road to recouping large sums.

Meanwhile, the Pompey Supporters Trust, has quietly, methodically, professionally, built a compelling business case. Raising £2m in deposit backed pledges from supporters, £1m from local businessmen and a £1.5m loan from Portsmouth City Council is a Herculean effort. It shouldn’t be that surprising though.

The Trust contains a series of highly professional and successful local businessmen and is advised by high-calibre insolvency professionals and legal experts. As one online sage pointed out, they aren’t sitting in a pub whirling scarves around their heads.

These supporters and business people have shown personal financial commitment that is simply eye-watering. And this is the key: the difference between the two bids is that the Trust aims to put money into Pompey with no expectation of ever seeing it again.

Their plan recognises the long struggle ahead: to rebuild a shattered, toxic brand. To create a stable squad, academy and revenue. To win over sponsors who want to be associated with a good news story. Eventually, to rebuild Fratton Park to allow Pompey to bury the old ‘sleeping giant’ tag that has drawn idlers and speculators to the club like moths to a flame.

Realistically, only the Trust, guided by genuine love for the club, have shown any appetite for the task of running Pompey according to a sensible business plan: long-term investment plus years of hard work plus customer goodwill equals a better business.

The final, and most compelling reason for Trevor Birch to choose the PST bid: his job is to do the best for the creditors.

Portpin may be secured creditors, but what they want and what is good for them may not be the same thing. They are being offered £3m to walk away. It’s impossible to see how Portpin taking over will generate more money for them.

Not a penny of Pompey’s 2010 Creditors Voluntary Arrangement was paid. If Portpin return a large section of the paying public will once again withdraw their custom. Declining gates, declining revenues, a League 2 budget and a three-year exit plan simply does not reasonably equate to an eightfold increase in the clubs value, or indeed any increase.

There is not one single shred of evidence to suggest that this toxic brew will result in Pompey’s long-suffering creditors, including Portpin, being more likely to be paid.

This utterly complex, baffling, infuriating saga finally comes down to a very simple premise: everyone benefits from a stable, and growing Pompey. No-one benefits from an unseemly scramble for the last few scraps on the poor man’s table.

The only people who propose a sensible, long-term vision for Portsmouth Football Club are its supporters, business and local authority. For football and business reasons, for fans and creditors there is only one realistic option for Birch.

Any other decision will surely find us all back here again, all too soon, still trying to understand what the hell is going on at Pompey.

Micah Hall is a Portsmouth supporter who blogs regularly at FansNetwork (access an archive of his work here) (He’s on Twitter here)

Find out more about the Pompey Supporters’ Trust

Article : Pompey Supporters' Trust and Trevor Birch

All eyes now turn to the Pompey Supporters Trust and Trevor Birch. This situation is now a rather simpler one. That may be a minority opinion, but one that is supported by the facts.

Pompey is for sale. It is a business with 8,000 season ticket holders, no players and £4m in the bank. Considering the Trust's break even budget put aside £2.65m for player salaries and we have a small handful of first year pros earnings a few hundred quid per week, the club is like any football club, far better off financially without all those footballers hanging around.

There is one buyer, who have a limited amount of money. The club has one tangible asset, a stadium worth £2m according to an independent valuer. The Trust submitted a bid weeks ago. It has a fully costed business plan that passed muster with Portsmouth City Council. It has actual, real money to invest, unlike any other bidder in recent years.

So what is the problem, why doesn't Birch just sell to the Trust? Well, for one, there is Portpin. They still hanker after their lost money and are still scrambling for a way to get it back. However, again this is quite a simple one. They can howl all they like, there is one sum of money on offer. There won't be any more. They can take it or leave it. Birch said himself that if necessary he can take them to court and force them to accept the best deal on offer. Well, it's the only deal on offer.

Then there are the players and the compromise agreements. Well, all those compromise agreements were negotiated by Birch with Portpin in mind. Well, their offer is off the table so those agreements are gone. I for one don't believe for a minute that Portpin allowed Birch to spend £9m on compromise agreements. It is far more likely to be 50% of that at best. Even so, there is going to have to be some renegotiation, because like Portpin's lost money, there is no-one around to pay it, and all those agreements were made conditional on a Portpin takeover as I understand it.

Portpin and our former players are rather like the Arabs in George McDonald-Fraser's excellent post-war memoirs, hanging on to a treasure chest full of pre-war Italian lira, not having heard the news that all the security and football creditor rules in the world are worthless without someone prepared to pay the sum assured to the bearer.

Which brings us to liquidation. Portpin do not own Fratton Park. In the event of liquidation, the money in the bank goes to PKF and Gaydamak. The player contracts are all cancelled. All football, creditors become unsecured. The one remaining asset, Fratton Park, is sold by the liquidator to the highest bidder and the money goes to Portpin as secured creditor.

As discussed, Fratton Park is independently valued at £2m, and a substantial proportion of that value is based on renting it to a football club that no longer exists. As there could be no football played and no rent earned, the value is substantially reduced. In any case, it comes back to what someone is prepared to pay for it. The development brief, approved by government, means Fratton Park is subject to compulsory purchase and severe planning restrictions. No developer is going to buy it, for the same reason no-one has bought the Gaydamak land. It's worthless. Even if you could get planning permission it is for light industrial units, not retail or residential, so you would be lucky to even get your money back, let alone make a profit. Industrial units in Fratton aren't exactly priceless.

In other words, in a liquidation scenario we are back to the same buyer, Pompey Supporters Trust, but they would be prepared to pay even less for the stadium. The current pledges would have to be returned to fans and business and the money raising effort would have to start again for a non-league Pompey. The chances are substantially less would be raised.

So the situation is only complicated by people's unrealistic expectations. In reality it's very simple: one club, one buyer, one amount of money. Birch needs to get people round a table and try to thrash out a deal - fast. If Portpin won't take the offer, get into court and make them. If the players won't, well they can have nothing instead.

PKF, the players and Portpin all came to Pompey to make a lot of money. Time to wake up and smell the coffee. Money's gone. All that's left of Pompey is the fans, a fine young manager and some young braves preparing to do the football equivalent of the Charge of the Light Brigade.

It's time you all got real and took your leave. The fans have got a long road in front of them whether the club survives or is liquidated and reborn. Hit the road, and let us get on with rebuilding our club. Starting at Fratton Park against Bournemouth.

Micah Hall ( www.fansnetwork.co.uk/football/portsmouth )

The Pompey Supporters' Trust is still seeking pledges from Pompey fans to back their bid. Information can be found here

Article : Pompey Supporters’ Trust Bid

Pompey Supporters’ Trust have made their bid for the club. Pause to take in the enormity of that statement. This is possibly one of the biggest steps taken in the history of the Trust movement. Not because of the fact that a Trust is in a position to take over a club so recently in the top tier of the game but because they are taking on the most paradoxical owner in its history. A self avowed ‘reluctant owner’ who claims to not want the club, yet has been strangely persistent in his involvement since August 2009. An owner who embodies everything that the Trust movement opposes.

In August 2009 Balram Chainrai was one of two names put forward to the Premier League as a potential new owner of Portsmouth Football club. The other was his business partner Levi Kushnir. At that time Sacha Gaydamak was unwilling to sell the club to them as they were suing his father Arcadi in Israel over a failed business deal, it was said. Instead he sold to Suliaman Al Fahim. Al Fahim managed to keep the club for just one month before a consortium alleged to have been owned by an unknown Arab, Ali Al Faraj, took the club over on 5 October. By 6 October Chainrai and Kushnir’s company Portpin held a charge over Fratton Park. From then dates the stranglehold that has accompanied the club’s downward spiral from Premier League to League 1.

Portpin added another charge in January 2010, just weeks before the club went into administration. On Portpin gaining ownership of the club from administration in October 2010 this charge was switched from the liquidated Oldco (Portsmouth City FC) to the Newco (Portsmouth Realisations – later to become Portsmouth (2010) Ltd). This manoeuvre has been questioned in court due to the fact there was no evidence of new money having been introduced to the business at this stage. There was certainly little spent on infrastructure at the club and the acquisition of players was always an issue fraught with promises but oddly botched and bungled in practice.

Portpin sold the club to CSI in June 2011 but retained their charge, secured as always on Fratton Park. The deal with CSI was one where the club was to be paid for by instalments and Chainrai could perhaps see that he would be getting his original 2009 charge finally paid off. CSI defaulted however under dramatic circumstances which sent both CSI and eventually Portsmouth (2010) into administration. CSI had fallen into the over-spending trap and had added £10.5m of debt to the club with very little to show for it, increasing the already excessive salary bill to an unsustainable level. Without the input of an owner’s cash the club was insolvent.

However Portpin, as charge holder over both companies by now, retains its influence over the future of Portsmouth Football Club. Whatever happens to the club in administration the charge it holds give Chainrai the legal right to demand payment from the owners of the club. This factor alone explains the lack of interest from other parties who have enquired about owning the club. No matter what Andrew Andronikou of CSI’s administrators UHY may say about lack of proof of funds, it is clear that any prospective buyers have been asked for funds way in advance of what the club is actually worth, just to satisfy Portpin’s charge. Whether illegal, unethical or ill-advised, there is no doubt that the involvement of Portpin in Portsmouth Football Club has led to two administrations and contributed to the club’s slide down the leagues. More seriously, their involvement has laid a blight on there being any chance of sustainable development in its future.

Yet Chainrai declares he does not want to own a football club and that he is the ‘owner of last resort.’ He has shown his reluctance by tabling a bare bones offer to purchase the club out of its current administration. This, he says, is to stave off liquidation of the club. Indeed liquidation would be bad news for Portpin as any value in PFC dies with the ability of the club to function in the Football League. Gone will be about £14m worth of Parachute Payments and dead would be the only asset with any value at all – Fratton Park. Portsmouth City Council have made it very clear that there will be no chance of permission being given for anything other than a sports venue at Fratton Park for the foreseeable future.

Chainrai’s offer is £500,000 which translates to 2p in the £ for creditors, or 0.4p if their debt is under the 2010 CVA which has never been paid. He has offered to pay the football creditors himself and businesses and charities owed less than £2,500. This makes business sense when parachute payments due will be in excess of what is owed in this respect. His offer is conditional on the administrator, Trevor Birch, reducing the current wage bill at the club. This bill still retains two players on premier league money plus a number whose salaries would easily break the League 1 Salary Control Management Protocol. He would, of course, also be able to transfer his charge to the Newco formed on coming out of administration. As a reluctant owner he would seek to be out of the club within three years, according to business partner Levi Kushnir. Just after the parachute payments cease of course, and dependant one might assume, on finding someone who would pay enough for the club to satisfy the charge Portpin holds.

Financially this stacks up – he acquires the club for a good price, having reduced the debts from his previous ownership without paying a penny, has access to the parachute payments and retains the asset on which he can place a charge. As a football club however, it looks less than enticing. If Chainrai is pursuing the £18m or so repayable on his charge he is doing it on an asset worth far less than that amount. Without investment the business of the club is worth very little. There will be no team able to challenge for honours, there will be no stadium development to improve turnover. As a football business it is valueless. Chainrai’s last periods of ownership show a reluctance to invest any further funds. The only asset of any value is the ground and valuations of that are subject to a high level of discrepancy. There is a ‘book value’ price of £13m, a ‘going concern’ price of £10m, a £5m valuation by a unnamed prospective buyer, a £2.1m value from and independent source and a less than £1m value in liquidation. All fall far short of the £18m charge that sits on it.

The Pompey Supporters Trust’s bid is entirely fan funded under a Community Interest Company umbrella. Whilst it also has the same condition as Portpin’s bid in regard to player salaries, it includes a bid for the ground. This makes the Creditor’s Meeting on Monday 25 June a very interesting proposition and ensures that Portpin will not be the only option for creditors to consider. Assuming the administrator is satisfied with the funding of the plan it offers the opportunity to challenge Portpin’s charge being transferred onto the Newco. The key lays in the disputed area of the value of Fratton Park. If the Trust’s offer represents ‘fair value’ for the ground plus offering creditors more than 2p in the £ then Birch can argue this is a better deal for creditors. It gives him the ability to test the value put on the ground in court and, if he wins, to ‘sell Fratton Park “as if it were not subject to the security”, as is provided for under the Insolvency Act.’ (Telegraph 22/6/12). This may require a long legal process.

Advised by Begbies Traynor, the Trust have played a very neat ball back into Portpin’s court. Not only do they offer the Club a more sustainable future with an ownership that has no intention taking money from the club but also it offers an opportunity to remove the debt millstone the club has carried with it for the last three seasons. If Chainrai indeed intends to only be an owner ‘of last resort’ he has been offered a very easy ‘get-out’. He can chose to accept the Trust valuation of the ground and walk away, cutting his losses under a liquidation scenario – into which recalcitrant players and agents could still force it. He could, on the other hand, face a long winded court process with a chance of having his whole involvement in the club brought into court to no real avail.

There are many conditions to be realised yet before the outcome is resolved. The clock is set ticking by the creditors’ meeting, after which there is a 28 day grace period where offers can be considered, even if the meeting does vote for Portpin’s proposal. Players can choose to push the issue to the wire by refusing to settle for compromise agreements on their contracts if they are not sold in that period. Portpin could up their offer – which would rather belie their claimed reluctance for ownership – and a bidding war could ensue. It depends which wins out – the desire to cling to a financial asset or the desire to run a football club for the benefit of the community of the City of Portsmouth.

One thing is patently clear, if the Pompey Supporters’ Trust can gain control of the club in this fight then it will stand as an inspiration for Trusts opposing illegal, unethical and ill-advised owners across the Leagues.

Pompey Supporters Trust are still taking pledges for community shares in their bid. Details here: http://www.communitypompey.co.uk/

S. J. Maskell (for www.twohundredpercent.net)

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