Earlier this week The Football League asked Leeds United's Administrator, KPMG, to seek to resurrect the club's Company Voluntary Arrangement (CVA).  Instead KPMG has now indicated that it intends to abort the CVA process altogether.

Consequently, the Administrator will now need to agree final creditor claims before making financial distributions to the club's creditors.  This will effectively lead to the liquidation of the 'Old' Leeds United Company (the company in possession of the club's share in The Football League).

In any insolvency situation The League's priorities are threefold, firstly the continuation of the football club if at all possible, secondly payment in full to football creditors and, finally, the best possible return for all other creditors.  To this end, The League insists upon the satisfaction of creditors being proven through the completion of a CVA (which requires 75% majority support from creditors). This process has always been followed in previous instances of club administrations.

In this particular case football creditors will be paid in full and the process thus far has already raised payment to unsecured creditors from 1p in the pound to around 11p in the pound.

However, The League acknowledges that the approval of a formal CVA may not always be possible and provision exists within The League's insolvency policy for clubs to be permitted to continue as a member club without a CVA.  This only applies in 'exceptional circumstances' and is at the absolute discretion of The Football League Board.

In light of the Administrator's decision, The Football League Board met this morning.  The Board agreed that, notwithstanding the manner in which this administration has been conducted, the club should be permitted to continue in The Football League.

Consequently, the Board has decided to make use of the 'exceptional circumstances' provision within The League's insolvency policy, for the first time, and agreed to transfer the club's share in The Football League to Leeds United 2007 Ltd.  Accordingly, the club's share has now been transferred.

However it is acknowledged that the club did go into administration and has been unable to comply with the terms of The League's well-established insolvency policy.  As a result, the Board determined that this transfer of membership should be subject to Leeds United having a 15 point deduction applicable from the beginning of the 2007/08 season.

Leeds United subsequently have lodged an appeal against this sanction, which will be heard at a special meeting of all League clubs, to be arranged in due course.