http://sport.independent.co.uk/football/coca_cola/article2514282.ece
Leeds enter administration in bid to erase £35m debt By Nick Harris Published: 05 May 2007 Leeds United went into administration at 3.15pm yesterday, incurring a 10-point penalty that immediately relegated them to League One and ruled out any remote chance of Championship survival via a series of freak results tomorrow. The move is sure to cause controversy, especially in League One, where Leeds will now start next season on a level playing field and not 10 points behind. Eyebrows will also be raised that KPMG, Leeds' administrators, instantly agreed to sell the club back to a newly formed company controlled by Ken Bates, who already owns Leeds. Leeds and Bates have done nothing wrong or illegal in such a deal. It makes sense for Leeds. But in effect Leeds could wipe out most of their £35m debt at a stroke, and suffer no meaningful penalty. The Football League's chief spokesman, John Nagle, said last night that the League does not approve of clubs going into administration. "People don't get paid their debts, and that's not good. But the law allows it." He added: "Given the recent reduction in the numbers of clubs resorting to insolvency proceedings, it is disappointing Leeds United have had to seek the protection of an administration order." The sale of the club is subject to approval by its creditors who will meet before the end of May to consider a Company Voluntary Agreement. The directors of the new company, called Leeds United Football Club Limited, are Bates, Leeds' chief executive Shaun Harvey and a Leeds director, Mark Taylor. For that deal to go through, it will need to be rubber-stamped by the club's creditors and by the Football League. But if successful, Leeds will emerge next season without the long-standing shackles of huge debt. One price they may pay is facing accusations that they have cynically worked the system to shrug off debts and escape effective punishment. Nagle said: "Discussions have already begun aimed at how Leeds United intend exiting administration. This will have to include complying with the League's insolvency policy under which all 'football debts' must be settled in full." A statement from KPMG revealed the club had debts "totalling approximately £35m, with a cash injection of approximately £10m required to continue trading". It also revealed that Customs recently issued a winding-up petition for approximately £5m and had this debt had not been paid by 25 June, the club may have been forced into liquidation. Richard Fleming, joint administrator and a KPMG restructuring partner, said: "We were asked by the board of directors to advise Leeds United on Monday 30 April 2007. The club has experienced financial difficulty for some years and was burdened with historic debt and wage structures. "This agreement has been reached to maximise the possibility of survival of this major football club, to minimise uncertainty for all the club's stakeholders and supporters and to allow the club to plan ahead." _______________________________________________ the Leeds List is an unmoderated mailing list and the list administrators accept no liability for the personal views and opinions of contributors. Leedslist mailing list [email protected] http://list.zetnet.co.uk/mailman/listinfo/leedslist The Leeds List - "where never is heard a discouraging word..."
