Tuesday, 4 February 2014
Leeds United face winding up Order
According to a report in the Financial Times Leeds United's shirt sponsors Enterprise Insurance have made a move to wind up the company.Enterprise, whose managing director Andrew Flowers is a failed bidder, has filed a winding-up petition for the Championship club over an alleged unpaid debt. It will be heard in the High Court in March.The Gibraltar-based insurer issued the petition on January 29, a day after talks with Sport Capital, a consortium including Mr Flowers, a life-long Leeds fan, and David Haigh, managing director of Leeds, collapsed.The move appears designed to prevent a sale to Massimo Cellino, owner of Cagliari, the Italian top flight club, who clinched an agreement to buy 75 per cent of Leeds on Friday. Since then, the manager, Brian McDermott, has been sacked and reinstated, and Mr Cellino’s lawyer, Chris Farnell, has been asked to leave Leeds’ Elland Road base. GFH Capital, the Bahraini investor seeking to sell the bulk of its stake in the club, has reiterated that it remains in charge. In debt proceedings, courts potentially have the power to reverse the sale of assets, freeze bank accounts and even order an administration or liquidation. Leeds, which has had a difficult financial history, entered administration in 2007, with £35m in debts. Mr Cellino has applied to the Football League to pass its “fit and proper person” test required of club owners. Leeds city council, which owns the club’s training ground, has also written to the league calling for a “thorough vetting” of Mr Cellino.Enterprise has apparently scrapped its shirt sponsorship of the club. In 2012 it lent Leeds £1.7m at 7 per cent interest for repayment in 2015. Mike Smith, a corporate insolvency expert from Jameson Smith, said the insurers’ move was “risky”, since the debt must be proved in law or costs could be awarded against it. Unless settled, the petition must also be advertised in the London Gazette. “Other creditors can use the same petition to pursue their own debts so I suspect it is solely being used as a bargaining chip to apply pressure to the board of Leeds United,” he said. Mr Flowers has reportedly joined a third bidding consortium, which includes Adam Pearson, former Hull City chairman, Mike Farnan, ex-Sunderland marketing director, and Gary Verity, who runs Welcome to Yorkshire, a tourism promotion agency. They are understood to be offering around £30m in staged payments. GFH bought Leeds in December 2012 for £17m from Ken Bates, the former Chelsea owner.