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The madness of our insolvency laws

June 4, 2007

So Ken Bates rules supreme at Elland Road once again. According to the BBC Ken Bates put the club into administration with debts of £35m. He needed 75% of creditors votes to buy the club back and after a recount got 75.2% of the creditors to back his plan which gives them just 1p in the £1. Superficially one might say all well and good but there are a lot of other factors at play here.

At the creditors meeting there were 6 bids in total 5 from UK bidders and one from the USA.

However two of the creditors (Astor Group and Krato Trust) would only support the Bates bid and held enough votes to defeat any other bid. Neither the administrators nor the solicitors know the identities of the beneficial owners of the Astor Group. Apparently Astor loaned the club £12.1m less than a couple of months ago shortly after they had served a final demand for £5m. This increased the debt and (coincidentally) increased their share in the voting process to such an extent that they would be in a position to dictate the eventual outcome

One of the bids would have returned 18p in the £ to creditors and yet a deal which returned only 1p in the £ was pushed through by groups which (allegedly) have no links to Bates!!

The law needs reforming so that the administrators make the decision about what represents the best deal for the creditors. It looks as if the system has been abused here and a lot of creditors are considerably worse off as a result.

Categories: Football, Leeds
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