GFH Capital to contest petition
Leeds' owners say they will contest a winding-up petition served by one of the club's main sponsors and the man who is trying to buy the Elland Road outfit, as the messy takeover situation in West Yorkshire shows no signs of clearing up.
Confirming a report which initially surfaced in the Financial Times on Tuesday, Gulf Finance House Capital (GFH Capital) said the club's lawyers were "vigorously" contesting the petition of Andrew Flowers, who is the boss of Enterprise Insurance and also one of the parties locked in a battle to buy out the Bahrain-based investment bank.
Flowers is believed to have served the petition relating to loans he made to the club in 2012, while unconfirmed reports have suggested that GFH Capital is struggling to meet basic running costs of the club it bought from Ken Bates 14 months ago.
It laid out its stance against Flowers in a late-night statement, though, while also maintaining it is managing the upkeep of the club.
"The winding up petition issued by Enterprise Insurance, a sponsor whose managing director, Andrew Flowers, claims to support the club, is misconceived and an abuse of legal process. It is being vigorously contested by the club's lawyers," said the statement.
"Under the ownership of GFH Capital, Leeds United has always met its financial obligations, and it will continue to do so."
GFH Capital, Italian Massimo Cellino and a consortium of which Flowers is a member of are currently involved in a complicated takeover battle for the club.
On Saturday GFH Capital confirmed it had agreed to sell a 75 per cent share of the club to Cellino, the 57-year-old Italian who also owns Cagliari.
He authorised the sacking of manager Brian McDermott on Friday before any paperwork had been signed - it remains unclear if any still has owing to a number of counter claims - with McDermott returning to work on Monday after a series of protests from angry Leeds fans before, during and after their 5-1 win over Huddersfield on Saturday.
It is understood Flowers has joined forces with a consortium called Together Leeds, headed up by ex-Manchester United director Mike Farnan and involving Hull FC owner Adam Pearson, after his own Sport Capital group, which included club managing director David Haigh, collapsed on Thursday.
The group were hoping to on Tuesday negotiate with GFH Capital in a bid to pip Cellino to the post, although it remains to be seen whether or not the latest developments will muddy the waters. Beyond that, question marks exist over whether or not Cellino would receive Football League approval.
Earlier, though, representatives of the Italian, known as 'The King of Corn' as a result of his agricultural business, insisted his two previous convictions should be regarded as 'spent' by the Football League.
League chiefs are currently considering the bid from Cellino and need to determine whether he passes the owners' and directors' test.
Cellino received a suspended sentence in 2001 for false accounting. His representatives say a 1996 fine for fraud was overturned on appeal.
In Britain, both convictions would be regarded as 'spent' under the Rehabilitation of Offenders Act, meaning that there is no obligation to disclose them, and that the offences should no longer be held against the person in any way.
It is understood that Cellino's lawyers have presented a case to the Football League arguing that he cannot be barred from owning Leeds due to the past offences.
Nor can the fact he could face a trial after being arrested in Italy last year as part of an ongoing investigation into the alleged misuse of public funds be held against him. Under current League rules, people are regarded as innocent until proven otherwise.
The Football League's owners' and directors' test states a disqualifying condition is "having an unspent conviction (or where the Rehabilitation of Offenders Act 1974 does not apply for any reason, having a conviction within the period that would have rendered that conviction unspent had the provisions of that Act applied) for" offences including dishonesty, corruption and perverting the course of justice.
The test does not have any conditions dealing with a person under investigation for an alleged offence.
GFH Capital confirmed on Saturday that Cellino's company, Eleonora Sport Ltd, had agreed a 75 per cent purchase, believed to be worth Â£25million.
This was after Cellino's bungled attempt to sack McDermott, using a lawyer who it later emerged had to be escorted from club premises on Monday.
McDermott, who stayed away from Elland Road at the weekend as the club's latest takeover saga plunged into farce, reported for duties as normal on Monday morning after GFH Capital confirmed the 52-year-old had not been sacked. Flowers said he would be withdrawing his sponsorship of the club as a consequence, along with academy sponsor Flamingo Land.
McDermott was unable to end continued speculation over who will take control of the Sky Bet Championship club at a press conference, but the fans have made it clear they favour the joint-bid of Sport Capital and Together Leeds.
There was no comment from Together Leeds or Cellino on Tuesday night.
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