Because of the financial problems suffered by the club, Portsmouth were forced to sell several of their top players and high earners, this included selling
Peter Crouch,
Sylvain Distin,
Glen Johnson and
Niko Kranjčar. On 21 July, Al Fahim was appointed non-executive chairman of Portsmouth. On 19 August, Portsmouth announced on their website that a rival consortium headed by current CEO Peter Storrie had also made a bid for the club; unknown at the time, this was backed by Ali Al-Faraj. Despite this, Al Fahim completed the takeover on 26 August; Al Faraj moved to review a takeover of
West Ham United. As the early stages of the 2009–10 season progressed, the finances dried up and the club admitted on 1 October that some of their players and staff had not been paid. On 3 October, media outlets started to report that a deal was nearing completion for
Ali al-Faraj to take control of the club. On 5 October, a deal was agreed for Al Faraj and his associates via
BVI-registered company Falcondrone to hold a 90% majority holding, with Al-Fahim retaining 10% stake and the title of non-executive chairman for two years. Falcondrone also agreed a deal with
Gaydamak the right to buy, for £1, Miland Development (2004) Ltd, which owns various strategic pockets of land around the ground, once refinancing is complete. 2 days after the Al-Faraj takeover was completed Portsmouth's former Technical Director
Avram Grant returned as
Director of football. On the pitch, Portsmouth's late transfer of funds called for a flurry of transfers at the end of the window, including the loan signing of
Ivory Coast international Aruna Dindane who would go on to score a
hat trick against
Wigan Athletic. An opening run of seven defeats saw fears Hart would be sacked. However at the eighth attempt, at
Molineux Stadium,
Hassan Yebda another loanee, headed the first win. Portsmouth were beaten 4–2 at home by
Aston Villa in the quarter finals of the
League Cup having beaten off Premier League high-flyers
Stoke City. Yet another loanee
Frédéric Piquionne was on target twice. However, because of the financial problems, the Premier League placed the club under a transfer embargo, meaning the club were not allowed to sign any players.
Avram Grant took over at Portsmouth on 26 November 2009 replacing former manager Paul Hart, who had been sacked by the board two days previously, due to the club's position at the bottom of the league.
In December 2009, it was announced that the club had failed to pay the players for the second consecutive month, on the 31st it was announced player's wages would again be paid late on 5 January 2010. According to common football contracts, the players then had the right to terminate their contracts and leave the club without any compensation for the club, upon giving two weeks' notice. Despite the financial difficulties, Grant's time as manager was initially successful. He gained two wins (against Burnley and Liverpool) and a draw away at Sunderland from his first five games. The only losses inflicted on Portsmouth in this period were by eventual double winners Chelsea and the previous season's champions, Manchester United. HM Revenue and Customs (HMRC) filed a winding-up petition against Portsmouth at the High Court in London on 23 December 2009. In March 2010, this winding-up petition was dropped, leaving Portsmouth with a nine-point penalty for entering administration. During the 2009–10 season, it had become apparent to the club's new owner
Balram Chainrai that Portsmouth were approximately £135 million in debt so to protect the club from liquidation, Chainrai placed the club into
administration on 26 February 2010, and the club appointed Andrew Andronikou, Peter Kubik and Michael Kiely of accountancy firm
UHY Hacker Young as administrators. This automatically incurred a nine-point penalty from the FA Premier League which came into effect on 17 March and resigned the team to almost certain relegation, which was mathematically confirmed on 10 April.
On 9 April it was announced David Lampitt would be joining Portsmouth as their new CEO after he had worked a period of notice at the FA, his current employer. Portsmouth were relegated to the
Championship the following day after
West Ham United beat
Sunderland. Despite this, Portsmouth won their FA Cup semi-final match against Tottenham 2–0 after extra-time the next day, with goals from
Frédéric Piquionne and
Kevin-Prince Boateng winning the match. They faced Chelsea in the
final at
Wembley on 15 May and lost 1–0 to a goal from
Didier Drogba. Despite being the FA Cup finalists, the club were denied a licence to play European football the following season in the
UEFA Europa League, and therefore the European place went to Liverpool. In May, Grant resigned as Portsmouth manager and later joined
West Ham, whose win over Sunderland relegated Portsmouth from the Premier League. On 17 June, the club's creditors voted for a
Company Voluntary Arrangement, with a 81.3% majority;
Her Majesty's Revenue and Customs (HMRC), Paul Hart and the agent of Portsmouth midfielder
Tommy Smith were the only ones to reject it, but HMRC appealed against the CVA due to the reduction of their considerable debt. On 15 July 2010 HMRC appealed against the proposed CVA on the last day before it would be formally agreed, the case was originally going to take place in October 2010, but after an appeal from the administrators at the club it was set for 3 August at the
High Court in London. The case was heard by Mr Justice Mann from 3 to 5 August where, having heard submissions from both sides, he turned down HMRC's appeal on all five counts put forward by the revenue service. HMRC decided not to appeal against the verdict, leaving Portsmouth's administrators to formally agree the CVA and bring the club out of administration. On 17 August, Balram Chainrai completed his takeover of the club and passed the owners and Directors F&PPT.
On 22 October, Portsmouth issued a statement saying: "it appears likely that the club will now be closed down and liquidated by the administrators.", but key creditor
Alexandre Gaydamak announced the next day that he had reached an agreement which could save their future.
[34] It was revealed just hours later that Portsmouth had finally come out of administration, with Balram Chainrai regaining control of the company.
On 23 November 2011, a Europe-wide arrest warrant was issued for owner of Portsmouth,
Vladimir Aleksandrovich Antonov, by
Lithuanian prosecutors as part of an investigation into alleged
asset stripping at Lithuanian bank
Bankas Snoras, which is 68% owned by Antonov and had gone into temporary administration the previous week. Operations in another of Antonov's banks,
Latvijas Krajbanka were suspended by
Latvian authorities on 22 November 2011 for similar reasons. Antonov was subsequently arrested at his offices in London on 24 November and was bailed.
Convers Sports Initiatives (CSI) released a statement which said "In the light of the recent events at Snoras Bank, Convers Sports Initiatives (CSI) would like to reassure its companies, staff, and the fans of its teams and events, that it remains very much business as usual." The statement added that "CSI has been solely financed through the private wealth of its owners. Snoras Bank has never provided funding for the purchase of a CSI organisation, nor has it lent any money to these businesses after they have been acquired." However, Lithuanian prosecutors added that they would be taking "all the necessary steps" to freeze assets belonging to Mr Antonov and his business partner. On 29 November 2011, Antonov resigned as chairman of Portsmouth after parent company Convers Sports Initiatives entered administration. On 24 January 2012, Portsmouth were issued with a winding up petition by HMRC for over £1.6 million in unpaid taxes, which was heard on 20 February.
On 17 February, Portsmouth went into administration for the second time in two years, bringing them an automatic 10-point deduction. Administrator
Trevor Birch admitted that the financial situation was "worse than we first feared" and that Portsmouth were "struggling to make the end of the season". On 11 April 2012, reports from administrators PKF revealed that Portsmouth owed £58 million debt with £38 million is owed to UHY Hacker Young, £10.5 million investment made by Vladimir Antonov's Convers Sports Initiatives (CSI) remains outstanding, Players are due £3.5 million in wages and bonuses for the last two seasons, while £2.3 million is owed to Revenue and Customs and additionally, £3.7 million is owed for general trade. On 21 April Portsmouth were relegated from the Championship after a 2–1 loss to Derby County, condemning Portsmouth to League One – the first time in 30 years that the club has played at that level.