Leeds United, which a month ago was put on administration by its chairman Ken Bates, with KPMG appointed as administrators, hung in the balance when on June 4 the Leeds’ administrator ordered a recount of creditors’ votes on a club’s survival plan. A six hour long creditors meeting has failed to allow Ken Bates to take over the club.
Even if Mr Bates’ bid to rebuy the club from the administrator goes through, the vote would be contested, because some of the larger creditors are likely to challenge the decision in the court.
The Bates takeover required 75% creditor approval and in the first count he received 75.02%. Leeds United has net debts of £35m and HM Revenue & Customs alone owed a £5m. So, Richard Fleming, administrator at accountants KPMG, adjourned the creditors’ meeting until Monday morning when the votes accounting for debt of in excess of £35m will be counted again.
A BVI-registered company Astor Investment Holdings is major creditor, owed about £13m, while Swiss-based Forward Sport Fund is owed £2.4m. The three biggest creditors have informed that they would back Bates. The BVI company has the controlling hand because with more than 25% of the debt owed to it alone, Astor could block any agreement requiring more than 75% of creditors’ backing.
A number of questions was asked at the meeting of creditors concerning possible links between Astor and Mr. Bates. If a link was established it could have affected BVI company’s ability to vote because of a potential prejudicial interest. However, the administrator had been unable to find any link despite intense investigation and accepted sworn statements from Mr. Bates and his co-director, Mark Taylor, plus a letter from Astor that they were unconnected.
However, later on it was found out that Leeds United’s last company accounts were directly referenced to the BVI company, the club’s owners and the company Mr Bates represents, as of June 30 last year. The administrator had to admit the link had not been known before.