Krasner fury at Bates' Leeds bid

[Nikki]

Former Leeds chairman Gerald Krasner says Ken Bates' offer to pay off the club's creditors is "derisory".
And Krasner has offered to represent the creditors free of charge to prevent chairman Bates retaining control.

Bates placed Leeds in administration this month and could get the go-ahead to buy the club back as director of a new company at a meeting on 1 June.

He has offered to settle the club's debts at 1p in the £1 and has the backing of the club's major creditors.

The creditors are owed a reported £22million.

But in a letter sent to creditors Krasner said: "Having now seen the papers in connection with the proposed CVA, it appears that Mr Bates' new company is proposing a dividend of 1p in the £1.

"Effectively, he will have bought the club back debt free for approximately £500,000, including professional costs.

"Quite frankly I consider this offer utterly derisory and unless you agree with this proposal, it is up to you as a creditor to make your voice heard."

Krasner added: "I have had a lot of approaches recently from fellow professionals, acting either for creditors or for third parties, who wish to invest in the club, but do not want to deal with Mr Bates.

"They have all asked me the same question, 'What can be done?'

"My answer has always been that if the Company Voluntary Arrangement (CVA) proposal by the joint administrators is voted down, then I believe that substantial new investment would come quickly into the club and the return to creditors would be much higher."

Krasner, director of Leeds-based solicitors Bartfields, has stressed he has no financial interest in the matter, but is acting on behalf of a number of creditors who have already approached him.

Leeds went into administration with debts of £35million following a winding-up order issued by the Inland Revenue, who are owed £5million in unpaid taxes.

The business was, with administrators KPMG's approval, almost immediately bought by a new company, Leeds United Football Club Limited, of which Bates is a listed director.

But the sale is subject to approval by the club's creditors who will be furnished with full details of takeover plans put forward by other consortia at the meeting on June 1.

http://news.bbc.co.uk/sport1/hi/foot...ed/6665933.stm

[Mickey]

I am a Loyal Leeds Supporter and I do not want this "shyster" bates in any control of Leeds, he is a businessman not a follower of Leeds United. What he did to the club was completely wrong, while were in the lower division he will sell off all or any good players to recoup some of the money, this in turn will make us even weaker than we are now and I don’t want to look any further than what the consequence of that will be

[BBK]

Isn't there some kind of fans consortium putting in a bid?

[Mickey]

Yes, according to radio Leeds there is something in the pipeline

[Mickey]

also this from the bbc website
But, while the administrators seem to have a ready-made rescue party in Ken Bates and his consortium, some of the creditors will be facing huge losses, whilst others will be paid in full.

This strange outcome is one that would be contrary to insolvency law in any other industry - except the fantasy world of football finance.

In every other type of insolvency, the creditors rank equally and they all stand to get the same payout when things go wrong.

But the football authorities will insist that the so-called "football creditors", such as the players and other clubs owed money for transfer deals, must be paid in full.

Otherwise, the insolvent club will be ejected from the professional football world and the players' contracts will revert to the league authorities. If that happened, the club would, in effect, be destroyed.


Creditors' approval

The way things are looking, the only penalty which Leeds will suffer will be a mandatory deduction of 10 points, which is likely to be applied this season under the football league rules.

This will make little difference, given that the club was already as good as certain to be relegated to League 1.

The chosen rescue path starts with administration to protect the club from the actions of creditors and ends with a company voluntary arrangement (CVA), in which a deal is struck with the creditors.

This requires the approval of 75% of those creditors who vote on the deal.

In Leeds' case, it looks as though the Bates' consortium and other creditors who will inevitably support them may have sufficient voting power to force through their acquisition of the club from the administrators.

That is despite any opposition from other creditors such as the Inland Revenue, who are said to be owed about £6m.


Tax payers' loss

The Revenue, which has specialists dealing with football problems, hates this sort of situation.

Standing back from the protective bubble of football passion and the power of the football authorities, it is hard to criticise their view, given that a large amount of taxpayers' money will be lost, while highly-paid footballers and affluent clubs will get all of their money back.

But unfortunately, if the mathematics of this particular situation dictate that this is the outcome, then there is nothing illegal about it.

A previous challenge by the Revenue in another football case - that this was a breach of the law - was rejected by the courts.

It can only be hoped that the arrival of hard-headed foreign sports entrepreneurs in the British game, such as the new owners of Liverpool, may herald an era of much greater financial responsibility, so that sagas like Leeds may become a thing of the past.

But the administrators are already signalling that there will little or no money for the non-football creditors of stricken Leeds.

As a result, the only hope for them is if one of the rumoured alternative bids turns into reality very quickly indeed and proves to be better for the creditors than the Bates deal.