Portsmouth fans' battle to take ownership of their club after a second administration in two traumatic years has moved a vital step closer after the administrator nominated the Pompey Supporters Trust as its preferred bidder. The trust will now seek approval from the Football League for its plans to take over the club, which is being financed by contributions from hundreds of supporters, including a small number of wealthy fans.
PKF's decision reverses its previous preference for the former owner, the Hong Kong-based lender of money Balram Chainrai, to take the club over again. Chainrai's company, the British Virgin Islands-registered Portpin, has a mortgage over Fratton Park and Portsmouth's other assets, to secure £17m he loaned before the club's first administration in 2010. However, after PKF nominated Portpin as its preferred bidder, the Football League issued detailed questions to Chainrai about the running of Portsmouth, the ownership structure of Portpin, source of financing and, crucially, whether Chainrai exercised any control of the club before it sank into administration a second time this year.
If he did, and acted as a "shadow director", which he emphatically denies, then Chainrai would have been a director or shadow director in two administrations, which would bar him from owning a football club under the league's rules. At its board meeting on 11 October, the league reached no definitive conclusion, and felt there remained questions to be answered. That led Trevor Birch, the administrator from PKF, to resume negotiations with the trust.
"After extensive discussions over the past few weeks," said Birch, "we have today nominated Portsmouth Supporters Trust as the preferred bidder for Portsmouth Football Club. We will be working with the trust, the Football League and the Professional Footballers' Association to conclude the sale of the club as soon as possible."
Ashley Brown, chairman of the trust, said they were "thrilled" to be given the opportunity to take over their club. The trust will operate a democratic one-member-one-vote ownership structure, regardless of how much money each trust member put in, and elect a board to run the club.
"This is a pivotal moment in the history of Portsmouth Football Club, but also to the wider footballing world," Brown said. "I'd like to take this opportunity to thank the fans for their continued support of the bid and of the club throughout this process, and for believing in what a true community club can offer."
A spokesman for Chainrai issued a statement containing a suggestion he could take legal action to contest PKF selling the club to the trust. The trust's offer includes around £750,000 for all creditors, a fraction of what they were owed when Portsmouth collapsed into insolvency a second time in February.
Chainrai has been relying on retaining ownership of the club and ground due to his charge to secure £17m, but the trust has had Fratton Park valued at only between £1.6m and £2.75m. If PKF accepts the trust's bid and sells the ground to the trust for a figure well short of Chainrai's £17m debt, he could mount legal action to claim it is inadequate and detrimental to him.
"We continue to work with the Football League to ensure we are ready to complete the acquisition of Portsmouth Football Club," Portpin said, bullishly, in its statement. "Our discussions remain productive and we have been given no reason to believe that there are any remaining obstacles to our bid.
"Whilst we note PKF's decision, we recognise that preferred bidder status has no basis in law. And we are confident that our bid offers both the best deal for creditors and is the only fully funded offer to provide Portsmouth FC with a financially sound and sustainable future."
PKF, having nominated the trust as preferred bidders, appears to have accepted legal action is possible, and to believe that a court would approve a sale to the trust, on the basis that its valuation of Fratton Park represents fair market value.
Iain McInnes, a businessman, lifelong Pompey supporter and trust member who will become the club's chairman if the trust completes its takeover, said: "We believe our bid is realistic and credible, which is a view shared by the administrator. Although there remains a huge amount of work to be done to ensure the right outcome for the club, we are confident we will succeed."