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Could the Leeds United takeover end in Administration?

29/1/2014

 
The dreaded 'A' word has started to appear around Twitter today, and when Leeds United and Administration are mentioned in the same sentence, the blood starts pumping.

Before we look at the evidence, if you can call it that, let's just confirm what Administration is.  When a company cannot pay a bill or debt, the person or company that are owed the money have the right to demand this business stops trading.  It cannot afford its bills so shouldn't be allowed to continue to trade.  A court demands the company cease to trade (Winding Up order) and takes possession of all of its assets  to sell to pay back the creditors (liquidation).

A company has a right to protect itself from this, with a process called Administration.  This is where the court appoints a team of Administrators to go in and find out what is going on - the Administrators have lots of options, such as renegotiating the debts, continuing to trade, sell part or all of the assets, or even sell the business to the highest bidder - and so on.  They act in the best interest of the creditors but actively seek to keep the business going where possible.

So, back to Leeds United and the takeover.  The Consortium looking to buy Leeds United is reported to have already invested over £6m into the club to help meet running costs.  All quite normal and happy considering this was from the people expected to complete the purchase of the club.

As the deal looks to be struggling, it has been reported that Andrew Fisher, who last night hit out at GFH-C, has now walked away from the deal - and is demanding his money back.  Alongside that rumour is the one citing that Massimo Cellino has taken his place in the consortium.

Now IF Andrew Fisher has walked away, and IF he is demanding his money back immediately (and IF he is legally entitled to do so) and IF GFH-C cannot raise the funds elsewhere to pay him, then he could look for a winding up order - IF he wanted to, and GFH could look to Administration for protection IF that was the right course of action to take place.

But that is a lot of IF's.

The source of these rumours is largely Twitter, which also showed me a cat riding a hoover - so is not the most reliable, and should be treated sceptically, but the fact is it remains possible - we just can't gauge how likely.



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