Leeds United Football Club Limited
Encyclopedia
Leeds United Football Club, founded 4 May 2007, is a limited company
, the directors
of which are Ken Bates
, Shaun Harvey
and Mark Taylor. The company purchased Leeds United A.F.C.
via a creditor
s vote after the club entered administration
, but this ownership was challenged by HM Revenue & Customs and the club was subsequently put up for sale by the administrators KPMG
.
on May 4, 2007, thus incurring a 10-point deduction which confirmed the club's relegation to League One
. Administration had been predicted for some time, due to crippling debt
s created during Peter Ridsdale
's chairmanship. For his part, Ridsdale denied any of the current situation was his fault, only days after having admitted it was a mistake to allow the then-manager David O'Leary
to spend so lavishly on players. Ken Bates, however, blamed Leeds' financial situation firmly on Ridsdale and his board.
on June 25, 2007 by Her Majesty's Revenue and Customs
, to whom the club owe £6 million.
's son Duncan announced that he was in the process of forming a consortium to buy the club saying "I've tried to ignore my feelings for a long time as I know the aggravation needed to put things right. But when things get this bad, I can't ignore it. My feelings run too deep. I am interested in trying to get Leeds back where they belong, which is in the top six of the Premiership. I've held talks with some influential people and the feedback has been good. I will be holding more talks in the next few weeks" adding on 13 May 2007 that he would be calling Bates the following day regarding his bid. Simon Morris also launched a rival bid to Ken Bates' worth £10 million in hope of the creditors and football league approving his bid above Ken's. The bid included eventual plans to build a new 50,000 seater stadium as part of a 'world class leisure venue', as well as providing £25million in funds to stabilise the troubled club. It was revealed that a large amount of Leeds' debt was owed to many ex-players whom left up to three years prior to the club entering administration, £18 million of the £35m was however owed to three companies, and £6 million owed to HMRC
Following the announcement that the CVA would be heard and voted upon by the clubs creditors on 1 June 2007, the club's previous chairman Gerald Krasner
offered to represent the club's creditors free of charge to stop Bates from re-gaining control of the club, after it was revealed that each creditor would receive 1p for every pound they were owed if Bates' bid was successful. The deal however contained a clause that this would rise substantially if the club attained promotion the Premiership within the next five seasons (before 2012-13). On 21 May 2007 32 of the 36 players in the Leeds squad agreed to defer their wages until the club had emerged from administration; the remaining four were paid by the administrators. On 23 May 2007 Revie provided proof of funds backing his bid making three bids for the creditors to decide between. Ken Bates stated after this rival bid that his bid will be the only one to save Leeds from annihilation. On the day before the CVA, KPMG revealed that there were five offers in total on the table for Leeds United including, Bates', Morris' and Revie's, however KPMG stated they expected Bates' offer to be accepted. On 1 June 2007 75.02% of the creditors voted in favour of Ken Bates' bid, however it was so close a recount was scheduled for the following Monday. The meeting intended to decide the fate of the club was prolonged due to "heated objections" to the sale process and there was some debate on whether one of the four other bids would be better for creditors. Simon Morris revealed on 2 June 2007 that he was improving his offer to 40x that of Bates' in order to try to secure CVA approval in his favour, with creditors receiving 20p in the pound straight away and 20p in the pound over a set period of time. Morris' bid was too late however, with a recount only being due on the following Monday and not another vote. The recount ended in Bates' favour with 75.20% of the vote going his way meaning Bates now had full control of the club. A period of 28 days still hung over the club, to allow any appeal against Bates regaining control to be lodged, and former Leeds director Melvyn Levi has hinted that this could occur. The 28 day period also stopped any player transfers from occurring.
challenged the CVA. This left a very uncertain future and possibly liquidation of the club. Bates had previously stated "If there is a legal challenge, it could take two or three months to get to court and be decided. In the meantime, who is going to pay to run the club? So far it's been funded by the 'new Leeds', but if there is a challenge, the 'new Leeds' won't do it because it's a risk. The implications are that the club would close down. It would mean liquidation. Leeds United would cease to exist, and the loss of 500 jobs would be a further drain on government resources." With the intention to challenge the CVA announced by HMRC, Simon Franks announced he was determined to buy Leeds United through his Redbus investment vehicle. He commented "We are absolutely committed to gaining control of Leeds United and to rebuilding the club, We have already told the liquidator that we will cover short term liquidity problems and that will be standing by our bid and will increase it given certain information. Our bid was significantly better than Ken Bates' and we are in a position to move very quickly if we are offered the right commercial terms." Following the challenge by HMRC the club was put up for sale by KPMG, with only offers before 5pm (BST) on Monday 9 July 2007 being accepted. Former Leeds commercial director Adam Pearson also stated he intended to make a bid for Leeds however Ken Bates has stated that he will take legal action if any other bid than his own is successful. After the deadline had passed it was revealed that Simon Franks and Simon Morris had joined forces to bid for the club. After Much deliberation KPMG revealed that once again they had chosen Ken Bates' bid. The league eventually sanctioned the sale to Bates without the club going through a CVA under the "exceptional circumstances rule" but imposed a 15 point deduction due to not following football league rules on clubs entering administration. On 31 August 2007 HMRC decided not to pursue their legal challenge any further therefore accepting Bates' final offer.
and the FA
, LUFC Limited have stated that they will seek legal advice in regards to overturning the penalty imposed. On 23 November Leeds United requested that their 15-point deduction to be adjudicated by the High Court rather than the Football Association after having failed in two requests to the FA to set up an independent commission to review that decision. The Leeds Board Commented "In effect, the same individual confirmed his own earlier decision, There was no independent review." This request was however also rejected by the F.A. Leeds eventually served the Football League with a writ for the points deduction challenge to be heard in the high court however on the final day available to respond to the writ the Football League offered Leeds a closed doors arbitration hearing instead. The panel was made up of Peter Cadman, whom had chaired past Premier League disciplinary commissions, Peter Leaver, the former Premier League chief executive, and chaired by Sir Philip Otton a High Court Judge experienced in football legal matters. Leeds accepted this and after the panel heard both sides of the argument between 16 April and 21 April 2008 they eventually returned a decision on 1 May. The decision returned denied Leeds any points return. Two of the main reasons given for the rejection by the three man arbitration panel include the impact of a reinstatement of any points on other teams near the top of League One
and the delay in bringing the matter to arbitration. The Arbitration Panel released short and extended documents detailing the final decision.
Limited company
A limited company is a company in which the liability of the members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. And the former of these, a limited company limited by shares, may be...
, the directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
of which are Ken Bates
Ken Bates
Kenneth William Bates is a British businessman and football executive. The current chairman and now owner of Leeds United AFC, Bates was previously chairman and majority shareholder of Chelsea FC from 1982 until 2003....
, Shaun Harvey
Shaun Harvey
Shaun Antony Harvey is a British businessman and football executive. Harvey is the chief executive officer of Leeds United, as well as a club director. Prior to joining Leeds, Harvey was managing director at Bradford City...
and Mark Taylor. The company purchased Leeds United A.F.C.
Leeds United A.F.C.
Leeds United Association Football Club are an English professional association football club based in Beeston, Leeds, West Yorkshire, who play in the Football League Championship, the second tier of the English football league system...
via a creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s vote after the club entered administration
Administration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
, but this ownership was challenged by HM Revenue & Customs and the club was subsequently put up for sale by the administrators KPMG
KPMG
KPMG is one of the largest professional services networks in the world and one of the Big Four auditors, along with Deloitte, Ernst & Young and PwC. Its global headquarters is located in Amstelveen, Netherlands....
.
Entering Administration
Leeds entered voluntary administrationAdministration (insolvency)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going...
on May 4, 2007, thus incurring a 10-point deduction which confirmed the club's relegation to League One
Football League One
Football League One is the second-highest division of The Football League and third-highest division overall in the English football league system....
. Administration had been predicted for some time, due to crippling debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
s created during Peter Ridsdale
Peter Ridsdale
Peter Ridsdale is an English businessman who is currently the Chairman of Football Operations at League Two club Plymouth Argyle. Ridsdale was previously the chairman of Leeds United, Barnsley and Cardiff City.-History:...
's chairmanship. For his part, Ridsdale denied any of the current situation was his fault, only days after having admitted it was a mistake to allow the then-manager David O'Leary
David O'Leary
David Anthony O'Leary is an Irish football manager and former player. His managerial career began at Leeds United and later he managed Aston Villa. He most recently worked as the manager of Al-Ahli Dubai...
to spend so lavishly on players. Ken Bates, however, blamed Leeds' financial situation firmly on Ridsdale and his board.
Bates is Back
KPMG Restructuring were appointed as administrators of Leeds United and, within minutes of entering administration, the club was sold to Leeds United Football Club Limited. Had the club not voluntarily entered administration, they would have been forced into liquidationLiquidation
In law, liquidation is the process by which a company is brought to an end, and the assets and property of the company redistributed. Liquidation is also sometimes referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation...
on June 25, 2007 by Her Majesty's Revenue and Customs
Her Majesty's Revenue and Customs
Her Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes and the payment of some forms of state support....
, to whom the club owe £6 million.
Future Ownership
On 6 May 2007 Don RevieDon Revie
Donald George 'Don' Revie, OBE, , was an English footballer who played for Leicester City, Hull City, Sunderland, Manchester City and Leeds United as a deep-lying centre forward. After managing Leeds United he managed England from 1974 until 1977...
's son Duncan announced that he was in the process of forming a consortium to buy the club saying "I've tried to ignore my feelings for a long time as I know the aggravation needed to put things right. But when things get this bad, I can't ignore it. My feelings run too deep. I am interested in trying to get Leeds back where they belong, which is in the top six of the Premiership. I've held talks with some influential people and the feedback has been good. I will be holding more talks in the next few weeks" adding on 13 May 2007 that he would be calling Bates the following day regarding his bid. Simon Morris also launched a rival bid to Ken Bates' worth £10 million in hope of the creditors and football league approving his bid above Ken's. The bid included eventual plans to build a new 50,000 seater stadium as part of a 'world class leisure venue', as well as providing £25million in funds to stabilise the troubled club. It was revealed that a large amount of Leeds' debt was owed to many ex-players whom left up to three years prior to the club entering administration, £18 million of the £35m was however owed to three companies, and £6 million owed to HMRC
Following the announcement that the CVA would be heard and voted upon by the clubs creditors on 1 June 2007, the club's previous chairman Gerald Krasner
Gerald Krasner
Gerald Krasner FCA, FABCA was a partner in Bartfields, a corporate recovery firm based in the United Kingdom. He is a former chairman of the West Yorkshire football club Leeds United A.F.C....
offered to represent the club's creditors free of charge to stop Bates from re-gaining control of the club, after it was revealed that each creditor would receive 1p for every pound they were owed if Bates' bid was successful. The deal however contained a clause that this would rise substantially if the club attained promotion the Premiership within the next five seasons (before 2012-13). On 21 May 2007 32 of the 36 players in the Leeds squad agreed to defer their wages until the club had emerged from administration; the remaining four were paid by the administrators. On 23 May 2007 Revie provided proof of funds backing his bid making three bids for the creditors to decide between. Ken Bates stated after this rival bid that his bid will be the only one to save Leeds from annihilation. On the day before the CVA, KPMG revealed that there were five offers in total on the table for Leeds United including, Bates', Morris' and Revie's, however KPMG stated they expected Bates' offer to be accepted. On 1 June 2007 75.02% of the creditors voted in favour of Ken Bates' bid, however it was so close a recount was scheduled for the following Monday. The meeting intended to decide the fate of the club was prolonged due to "heated objections" to the sale process and there was some debate on whether one of the four other bids would be better for creditors. Simon Morris revealed on 2 June 2007 that he was improving his offer to 40x that of Bates' in order to try to secure CVA approval in his favour, with creditors receiving 20p in the pound straight away and 20p in the pound over a set period of time. Morris' bid was too late however, with a recount only being due on the following Monday and not another vote. The recount ended in Bates' favour with 75.20% of the vote going his way meaning Bates now had full control of the club. A period of 28 days still hung over the club, to allow any appeal against Bates regaining control to be lodged, and former Leeds director Melvyn Levi has hinted that this could occur. The 28 day period also stopped any player transfers from occurring.
CVA Challenge
One day before the 28 day period was due to end, Bates altered his offer to ensure it was not challenged. He altered the clause stating that if Leeds made the premiership in five years then the creditors would receive an extra 30p in the pound, extending this period of time to 10 years, and increased the amount they would receive from 1p in the pound to 8p in the pound straight away. The 28 day period was due to come to a close on 3 July 2007 at 4pm (BST). With just minutes to spare HM Revenue & CustomsHer Majesty's Revenue and Customs
Her Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes and the payment of some forms of state support....
challenged the CVA. This left a very uncertain future and possibly liquidation of the club. Bates had previously stated "If there is a legal challenge, it could take two or three months to get to court and be decided. In the meantime, who is going to pay to run the club? So far it's been funded by the 'new Leeds', but if there is a challenge, the 'new Leeds' won't do it because it's a risk. The implications are that the club would close down. It would mean liquidation. Leeds United would cease to exist, and the loss of 500 jobs would be a further drain on government resources." With the intention to challenge the CVA announced by HMRC, Simon Franks announced he was determined to buy Leeds United through his Redbus investment vehicle. He commented "We are absolutely committed to gaining control of Leeds United and to rebuilding the club, We have already told the liquidator that we will cover short term liquidity problems and that will be standing by our bid and will increase it given certain information. Our bid was significantly better than Ken Bates' and we are in a position to move very quickly if we are offered the right commercial terms." Following the challenge by HMRC the club was put up for sale by KPMG, with only offers before 5pm (BST) on Monday 9 July 2007 being accepted. Former Leeds commercial director Adam Pearson also stated he intended to make a bid for Leeds however Ken Bates has stated that he will take legal action if any other bid than his own is successful. After the deadline had passed it was revealed that Simon Franks and Simon Morris had joined forces to bid for the club. After Much deliberation KPMG revealed that once again they had chosen Ken Bates' bid. The league eventually sanctioned the sale to Bates without the club going through a CVA under the "exceptional circumstances rule" but imposed a 15 point deduction due to not following football league rules on clubs entering administration. On 31 August 2007 HMRC decided not to pursue their legal challenge any further therefore accepting Bates' final offer.
15 Point Deduction Appeal and Legal Challenge
After an appeal against the 15 point deduction was rejected by both the Football LeagueThe Football League
The Football League, also known as the npower Football League for sponsorship reasons, is a league competition featuring professional association football clubs from England and Wales. Founded in 1888, it is the oldest such competition in world football...
and the FA
The Football Association
The Football Association, also known as simply The FA, is the governing body of football in England, and the Crown Dependencies of Jersey, Guernsey and the Isle of Man. It was formed in 1863, and is the oldest national football association...
, LUFC Limited have stated that they will seek legal advice in regards to overturning the penalty imposed. On 23 November Leeds United requested that their 15-point deduction to be adjudicated by the High Court rather than the Football Association after having failed in two requests to the FA to set up an independent commission to review that decision. The Leeds Board Commented "In effect, the same individual confirmed his own earlier decision, There was no independent review." This request was however also rejected by the F.A. Leeds eventually served the Football League with a writ for the points deduction challenge to be heard in the high court however on the final day available to respond to the writ the Football League offered Leeds a closed doors arbitration hearing instead. The panel was made up of Peter Cadman, whom had chaired past Premier League disciplinary commissions, Peter Leaver, the former Premier League chief executive, and chaired by Sir Philip Otton a High Court Judge experienced in football legal matters. Leeds accepted this and after the panel heard both sides of the argument between 16 April and 21 April 2008 they eventually returned a decision on 1 May. The decision returned denied Leeds any points return. Two of the main reasons given for the rejection by the three man arbitration panel include the impact of a reinstatement of any points on other teams near the top of League One
Football League One
Football League One is the second-highest division of The Football League and third-highest division overall in the English football league system....
and the delay in bringing the matter to arbitration. The Arbitration Panel released short and extended documents detailing the final decision.