The crisis at Leeds United deepened yesterday after the club's major creditors refused to extend their "standstill agreement" on £80m of debts and Leeds plc asked the stock exchange to suspend trading in its shares.
While the creditors stopped short of forcing Leeds to the wall immediately, the developments increase the chances that Leeds could go into administration in the near future, perhaps next week.
As recently as Thursday evening, senior figures at Leeds were still hoping the club would be granted a fortnight's further extension to the standstill agreement, which expired at 2pm yesterday. But it now seems that the hand of Trevor Birch, Leeds's chief executive, has been forced, and he may not be given as much time as he would like to find a buyer.
One of two consortiums that had been investigating the possibility of a takeover withdrew its interest on Thursday. The other consortium, also made of up local businessmen, said in a statement that it was "the only realistic bidder for the club that has the credentials and the finances to save it from administration and possibly liquidation.
"We also see this acquisition as a long-term investment that will establish the club as a viable business, going forward, regardless of whether it remains in the Premiership or the Nationwide League. Our business plan is not dependent on Premiership survival.
"Any suggestion that the consortium is looking at this acquisition as an asset-stripping exercise is completely untrue, so much so we can make a commitment now that, if we are successful in buying the club, Leeds United's future is and always will be at Elland Road. Anyone suggesting otherwise is simply scaremongering."
It seems there are only three ways forward for Leeds now. One is that Leeds will go into administration soon and the administrators will do a quick deal with the remaining consortium that will satisfy the major creditors. This could possibly involve the major creditors accepting a cash payment plus ownership of Elland Road to settle Leeds's debts. All unsecured creditors would lose most of their money but the new owners - who may or not have links to the former Bradford chairman, Geoffrey Richmond - would take the club forward. The club would become tenants of the creditors at Elland Road.
The second scenario is that Leeds will go into administration but no deal is done quickly with a buyer. The administrator's priority would be to slash costs quickly by selling players and cutting wages. This would almost inevitably lead to huge instability in the run-in to the end of the season and undermine the fight to stay in the Premiership.
The third scenario is that Leeds stay out of administration and Birch is given up to two more months to find the right buyers once Leeds's fate in the Premiership has become certain, one way or the other. This would seem the most sensible way forward but yesterday's denial of an extension to the standstill agreement suggests the creditors might want a quicker solution.
In the statement to the stock exchange, Leeds said that "the existing standstill arrangements ... have not been formally renewed".
Leeds had already persuaded a variety of bondholders and finance firms to extend their deadlines five times in the past two months. The statement continued: "However, the board confirms that it continues to retain the support of these major finance creditors whilst it seeks to finalise its negotiations with interested parties relating to a long term financial restructuring of the group."Reuse content