see the paragraph about the hearings at the end............. Taxman challenges resale of Leeds United
By Rob Waugh THE future of Leeds United was thrown into fresh doubt last night after the taxman dramatically launched an 11th hour challenge to the controversial resale of the club to Ken Bates. HM Revenue and Customs (HMRC) issued legal proceedings in the High Court to block the deal only an hour before yesterday's 4pm creditors' deadline – a move which Mr Bates has claimed would force the club into liquidation. In a statement, HMRC said: "We can confirm that HMRC has asked the court to set aside the decision made at the recent creditors' meeting. "Our objective is to seek a better outcome for the taxpayer from the administration of Leeds United." The taxman stood to lose virtually all of a £7.7m debt owed by Leeds United after creditors narrowly voted in favour of a company voluntary arrangement (CVA) which would have seen just 1p paid for every pound owed as part of the deal to resell the club to Mr Bates' control. The CVA needed 75 per cent of creditors' debt to succeed and was eventually passed with 75.2 per cent after a recount. However, many creditors were unhappy with how an anonymously-owned offshore company called Astor had told the club it would only accept the resale to Mr Bates when other bidders for the club were prepared to pay more than 1p in the pound. Astor's debt of over £12m – more than 25 per cent of the club's total debt of in excess of £35m – was enough for it to play a controlling hand at the creditors' meeting a month ago. It is understood that the role of Astor and questionmarks over whether the company had any connection with Mr Bates will form part of HMRC's legal challenge. Mr Bates and Astor both told the club's administrator – KPMG – that they were unconnected. In addition, the late emergence of a £480,000 debt to a radio station set up by Mr Bates last year which hadn't appeared on the original list of creditors is also going to be raised by HMRC. The debt to Yorkshire Radio helped nudge the creditors vote above 75 per cent. And the position of football creditors, including highly-paid players, as preferred creditors who are guaranteed to received every penny they are owed under Football League rules is also likely to be challenged. The late intervention by the taxman took Leeds by surprise yesterday after the club had hoped that an increased offer to creditors of 8p in the pound – made the previous evening – had headed off the threat of a legal challenge. Last night the club issued a statement which said: "The club can confirm that the Inland Revenue have served notice of their intentions to challenge the CVA. We do not have all the details as yet and do have a number of options available to us. "We remain confident of a positive outcome despite this disappointing news and will carry on with business as usual in the meantime." Mr Bates has not commented personally. But earlier this week, he said: "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." However, there is speculation that KPMG may be under pressure to forestall the HMRC legal challenge by withdrawing the CVA and finding a way to open up the sale of the club. Former Leeds chairman and insolvency practitioner Gerald Krasner said: "It should be opened up to the highest bidder to get the best deal for creditors which would also, in my opinion, be the best deal for Leeds United going forward." The challenge by HMRC was being seen as vindication of the stance of three Yorkshire MPs – Phil Willis, Colin Burgon and George Mudie – who have called for investigations into how the proposed resale to Mr Bates was being conducted. The HMRC challenge was heard by Mr Justice Patten at the High Court in Leeds. The same judge will hold a directions hearing, also in Leeds, on Friday morning when the case is likely to be adjourned for a later date. The court is likely to insist on a strict timetable given the rapidly approaching new football season. KPMG did not comment last night. _______________________________________________ the Leeds List is an unmoderated mailing list and the list administrators accept no liability for the personal views and opinions of contributors. Leedslist mailing list [email protected] http://list.zetnet.co.uk/mailman/listinfo/leedslist Join The Leeds United Supporters Trust at www.lufctrust.org
