Winding up petition issued against Leeds United
05-Feb-2014Andrew Flowers was rejected in the bid to buy Leeds United from Gulf Finance House (GFH) and has now, according to reports, issued a winding up petition against the football club.
Owner of Enterprise Insurance (Leeds United shirt sponsor), Flowers, failed to win over GFH at the end of last month and reportedly ordered a winding up petition the very next day against the club. Flowers’ claims Enterprise Insurance is owed money by Leeds United.
GFH hit back on Tuesday (05 February), stating Flowers move was ‘misconceived and an abuse of the law’. According to GFH, there were ‘no valid grounds to issue the petition’ and has reassured the public that Leeds United is not struggling financially and has always made payments when they fall due.
Flowers seems adamant about buying the club from current owner, Massimo Cellino, and is employing a number of tactics to do so. He is planning to address his bid to buy the club to the press today at a conference. It’s been alleged the previous bid was rejected due to Enterprise Insurance failing to come up with the money.
GFH will now be dealing with the legal actions against them while Enterprise Insurance continues their bid to buy the club.
It’s too early to say what the outcome of these actions will lead to but it is evident the club has been caught up in a bid battle and things won’t calm down any time soon.
A winding up petition (WUP) is one of the most serious actions taken against a company if they have failed to pay back debt to creditors or relationships have broken down due to late payments or lower than expected returns. In the Leeds United case, it appears Flowers has issued the petition in order to settle the dispute over the bid, which can happen if creditors feel they are ignored.
This kind of action is likely to be dismissed by the Court, however , as a WUP should only be issued if the company is thought to be insolvent. As Flowers seems to be issuing one to settle a dispute, this could be deemed in the court as an abuse of process.
Read here about the effect of a winding up petition on a football club
There can be ways to stop a WUP, either through a CVA or adjournment, however action must be taken quickly as it is a very serious threat to the company and can impact the company badly.