The former Leeds, Huddersfield and England defender was part of a consortium which withdrew its interest in a takeover last week, leaving another Yorkshire based group as the only consortium in the running.
Cherry said: "The big problem at the moment is that Leeds don't know which division they will be in next season. You are probably talking about £25m and the rest between staying in the Premiership or dropping down to the First Division, so it's an entirely different ball game.
"Our consortium was very tempted to stay involved, but the figures are such an unknown quantity and I am sure that will be the case for any interested parties.
"A lot of people may not like it, but Leeds may be better going into administration. Everyone would have a much clearer picture then. Administration would push the Premiership into making some decisions, good or bad, and people would know where they stood.
"I don't see any other way forward for the club."