Creditors force Birch's hand

The future of Leeds United remains uncertain today after the club’s creditors refused to sanction a further extension to the standstill agreement.

For almost three months Leeds chief executive Trevor Birch has traded on his good relationship with the main creditors to win the cash-strapped club valuable time and hopefully find a buyer.

The club had already passed five deadlines since the arrangement was put in place in early December but the main creditors, who are owed a combined £82m (€122m), have now forced Birch’s hand.

Trading in Leeds shares was suspended yesterday and the club released a statement saying that the standstill arrangement would continue only on an informal basis. It now leaves little time to negotiate a takeover and avoid the threat of administration.

The statement read: “The board of Leeds United plc announces that following discussions with its major finance creditors, the existing standstill arrangements that expired at 2pm (yesterday) have not been formally renewed.

“However, the board confirms that it continues to retain the support of these major finance creditors whilst it seeks to finalise its negotiations with interested parties relating to a long-term financial restructuring of the Group.

“In view of the fact that the Group no longer has a formal standstill arrangement, the board has concluded that it is inappropriate for trading in the company’s shares to continue and accordingly has requested that trading in its shares be suspended.”

There appears to be only one viable buyer, a Yorkshire-based consortium which has so far been represented in negotiations by insolvency expert Gerald Krasner. It is possible the club may go into administration to facilitate a sale to them.

The deal they offer is complicated. It is understood to be in the region of £25-30m (€37-44m) and involve a restructuring of the company, but as has previously been outlined, there would be no value to the shareholders.

But with the consortium – thought to be fronted by former Bradford chairman Geoffrey Richmond, despite his stringent denials – so far advanced in negotiations, it would be in any administrator’s best interests to push through a quick sale.

That would make it likely a number of the club’s minor debtors – bearing in mind Leeds have gross debts of more than £100m (€148m) – would then fall by the wayside.

The consortium insist they have the best interests of the club at heart and yesterday issued a statement to pacify fans concerned at the potential for asset stripping.

It read: “Despite all the hype and speculation we were, and still are, the only realistic bidder for the club that has the credentials and the finances to save it from administration and possibly liquidation.

“As Yorkshire businessmen we are all supporters of Leeds United and are passionate about the club and its future.

“But we also see this acquisition as a long-term investment that will establish the club as a viable business, going forward, regardless of whether it remains in the Premiership or the Nationwide League. Our business plan is not dependent on Premiership survival.

“We have already proven we have the resources and backing to satisfy the club and we are all committing personal finances to the deal – that makes it a personal as well as a business investment.

“Any suggestion the consortium is looking at this acquisition as an asset-stripping exercise is completely untrue, so much so we can make a commitment now that, if we are successful in buying the club, Leeds United’s future is, and always will be, at Elland Road. Anyone suggesting otherwise is simply scaremongering.”