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First English Premier Soccer Team to Seek Bankruptcy Protection

On February 26, Portsmouth became the first English Premier League soccer team forced to seek bankruptcy protection from its creditors. The move is expected to enable the insolvent business to restructure financially.

The High Court placed the bottom club in the world’s richest league into administration less than two years after it won the FA Cup. Balram Chainrai, the club’s fourth owner this season, failed to clear debts of approximately $105 million.

Portsmouth will continue operation, but will nearly certainly be relegated to the second-tier, with the nine-point penalty that administration brings leaving manager Avram Grant’s team 17 points from safety.

Court-appointed Andrew Andronikou has asked that the Premier League allow the club to sell one or two players and advance a $16.7 million parachute payment that would be due after relegation to the League Championship.

Everyone in the club, from manager Avram Grant to the players, are likely to see their wages slashed. Chief executive Peter Storrie said that he plans to leave once the club’s future is secured.

Chanrai seeks to recover a loan of $25.8 million he made to the previous owners. The Hong Kong businessman took over the club in February as a short-term arrangement to protect his investment after he became frustrated by several loan repayment deadlines were missed.

FIFA plans to discuss the 112-year-old club’s plight at its next executive committee meeting on March 18.

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