Portsmouth have been issued with a petition to be wound up by Her Majesty's Revenue and Customs for unpaid PAYE of £1.6m, according to Andrew Andronikou, the administrator of the club's parent company. He described the situation as "very serious''.

Michael Appleton, the manager, may be forced to sell players from his already threadbare 18-man squad to raise funds to help ease the crisis.

Andronikou, of Convers Sports Initiatives (CSI), which owns Portsmouth and who handled the club's administration last year, said: "The club effectively ran out of cash at the end of December. The situation is extremely serious, we're under extreme pressure to find a buyer.Time is against us. The issuing of the petition effectively means the club loses its ability to use its bank accounts. But we've made other provisions. We're not fazed or worried by it. The club's debts are not significant, we haven't got millions and millions of liabilities.

"We pretty much have two months' PAYE outstanding. We have about £800,000 a month and we never paid December and the club certainly is not in a position to pay this month so it's a total of £1.6m. We're waiting to see what the Revenue will do. They will probably advertise the petition [in the London Gazette] next week. I think there is a hearing date at the end of February.

"We need to focus on finding a buyer to completing a transaction to raise cash. In terms of working capital and cash it's only going to come from two sources: a buyer or player sales. We're working on both."

Asked whether Appleton would have much choice who to sell, Andronikou said: "No, but Michael has been extremely helpful and understanding of the circumstances, in general terms we are looking to lower the average wage bill."

The players' December wages have been paid. "We've got plans to have the players paid for this month as well, but this situation cannot continue indefinitely," he said.

If monies are not raised then Andronikou said he will have to ask the secured creditors, who include Balram Chainrai, the former owner still owed around £17.5m, if they wish to fund the club. Andronikou said: "We, the administrators of the parent company, can't stay as the de facto shareholders for too long – we haven't got the ability to provide monies for the club. The club is not in administration, the club is still running under the steam of the board. I'm anticipating HMRC will advertise the petition and that will be another problem we'll have to deal with in due course.

"We'll hopefully try and do a deal [to sell] in a very short period of time. We are trying to find [a new owner] who is not going to be there for five minutes."''