Date:Friday May 4 2007
Leeds United has today gone into administration in a move that has confirmed the clubs relegation from the Championship.
It is believed that soon after administrators KPMG were appointed, there had been an agreement for the club to be sold back to a consortium led by majority share holder Ken Bates.
KPMG revealed that club debt had reached around £35million and had been issued a winding up order by HM Revenue &Customs for £5million. Had this not been paid then the club would have been liquidated.
As per the league rules that were introduced in 2003 this now means that Leeds are docked 10 points, however it has been noted that after discussions with the Football League that the penalty will be taken this season meaning that the club will finish bottom of the table. About as good as this news gets, Leeds will start life in League One on 0 points like everyone else instead of -10.
The statement from KPMG in full reads:
'Richard Fleming, Mark Firmin and Howard Smith, of KPMG Restructuring, were today appointed administrators of Leeds United Association Football Club Limited at the request of the club's directors.
Shortly after their appointment the joint administrators agreed to sell the business and its assets to a newly formed company called Leeds United Football Club Limited, the directors of which are Ken Bates, Shaun Harvey and Mark Taylor.
The sale of the club is subject to approval by its creditors, via a Company Voluntary Arrangement (CVA).
This would see creditors forgoing a significant element of their debt, in order to allow the club to continue trading under new ownership. The creditors' meeting, to consider the CVA, will be held before the end of May. The Football League will also need to approve the sale.'
ichard Fleming, joint administrator and 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 significant financial difficulty for some years and was burdened with historic debt and wage structures.
It was necessary for the club to enter administration as its balance sheet dated 31 March 2007 indicated debts totalling approximately £35million, with a cash injection of approximately £10million required to continue trading.
Further, Her Majesty's Revenue & Customs (HMRC) recently issued a winding up petition for approximately £5million. If this debt had not been paid by 25 June 2007, the club may have been forced into liquidation.
The administrators understand from discussions with the Football League that the administration will result in the immediate deduction of 10 points from the club's current points total in this years Championship. This means that next season the club will start the campaign in League One with no points deducted.'
leming concluded: 'This agreement has been reached quickly 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 for next season.
There is now a big decision for the creditors to make at their forthcoming meeting.'
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Date:Friday May 4 2007
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