Leeds In Administration

Last updated : 04 May 2007 By Kevin Markey
The move means the Whites will be docked 10 league points immediately, ensuring relegation to League One next season.

A new firm headed by Bates, already a major shareholder, will buy the club pending approval by its creditors.

Leeds has struggled financially in recent years and was facing a winding up order from HM Revenue and Customs.

Debt issue Administrators KPMG said the club had debts of £35m and could have been forced into liquidation next month if it had not made this move.

By going into administration, the debts held by a number of leading creditors, including Bates, will be effectively wiped out.

But the sale must be approved by all the club's creditors next month and also by the Football League.

The news of the sale comes just hours after the Leeds United Supporters Trust told the club it was in a position to make a serious proposal to buy the club.

In recent years the club has sold its Elland Road home ground and its Thorp Arch training ground to cover previous cash shortfalls, caused by expensive player contracts and its relegation from the Premiership.

By entering administration, the club's finances can be reorganised and some of its debts eliminated.

However, football related debts, money owned to former players and managers, will transfer to the new owners.

Under League rules introduced in 2003, teams are deducted 10 points if they enter administration. Rotherham was the most recent club to suffer such a fate last year.

By taking the decision to go into administration during the current season, Leeds will have 10 points deducted while it is still in the Championship, rather than, was likely in any case, next season in League One.