League officials have been making inquiries into Chainrai’s suitability for renewed ownership of the club under the owners and directors’ test since last month. A meeting of the League board on Thursday was told the inquiries proved inconclusive.
Now the club will remain in administration, with PKF, the administrators, expected to renew dialogue with the Portsmouth Supporters Trust. It has presented a rival, funded bid that the administrator had hitherto considered secondary to Portpin’s.
But there remain a number of hurdles for the trust to overcome before it can be approved as Pompey’s owner. Chainrai's Portpin holds a debenture – a secured loan – over Fratton Park and there is a significant discrepancy between what it has demanded to sell it to the trust and what the trust considers fair value.
PKF has been reluctant to apply for the courts to force the sale because of the expense and time involved in litigation, and the risk that the price set would be too high for the trust to pay.
PKF has feared that if at the same time Portpin is blocked by the League from proceeding with the purchase it would leave Pompey with no credible buyer and liquidation would be inevitable. However it seems that because of the League’s rejection of the Portpin bid – it is unlikely to consider the matter again until its next board meeting on Nov 8 – PKF has little alternative now than to make an application to the courts.
Sources within PKF claim counsel have warned the second potential legal challenge to Portpin’s stance, over the legitimacy of the debenture, which was transferred from the club’s insolvent former parent company, CSI, in January, may fail.
A source with knowledge of what went on during the period leading to the club’s current administration suggested Chainrai cannot pass the owners and directors test: “In 2010 Portpin definitely benefited from the administration, and the spirit of the League’s rules is to ensure that insolvency should not be beneficial to clubs or their shareholders.
“Portpin effectively chose to put the club into administration because they refused to fund the club to trade on.”
The League refused to comment yesterday and a spokesman for PKF did not return calls. The trust said: “We are meeting PKF next week as part of our ongoing discussions.”
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