Leeds finally settle with creditors

Administrators acting for Leeds United plc yesterday added a full stop to the most spectacular financial collapse in the history of English football as they settled with the final creditors still owed money by the club's former owners, including a £30,000 pay-off to former chairman, Professor John McKenzie.

As part of the deal agreed in March 2004 with Gerald Krasner's consortium, the listed stock market vehicle was plunged into administration and the footballing side taken on by the new owners.

Garry Wilson, the Ernst & Young partner who was appointed as administrator, said yesterday that out of a pot of £500,000 secured at the time, all the smaller creditors who were still owed money had been paid off in full. The 30 to 40 small creditors included catering companies, former employees, consultants and even the club's milkman.

The outstanding debts were the final hangover from a gamble on success when Peter Ridsdale was the chairman and David O'Leary the manager.

That gamble spectacularly backfired and left the club forced to sell a string of big-name players. They were relegated from the Premiership at the end of the 2003-04 season.

Once all the debts had been cleared £100,000 was left over, which has now been returned to the club. Ken Bates, the former Chelsea chairman who bought the club from Krasner's consortium when they hit financial difficulties of their own, is likely to hand the money to the manager Kevin Blackwell to strengthen his squad.

"It's the curtain coming down on the saga," said Wilson. "The football club can now look to the future rather than the past. It's a happy ending to a sad tale in that the creditors have been paid in full and some money has been returned to the club."

The club's bondholders and the firm with which Leeds effectively mortgaged their players - Registered European Football Finance, backed by the insurance giant Gerling -agreed to a settlement of £22m at the time of the takeover. Between them, they were owed more than £82m at the time.

McKenzie, who took over from Ridsdale as chairman to deal with the fallout from an unprecedented spending spree but failed to stem the flow of red ink, attracted derision from fans for continuing to collect a salary and consultancy fees despite the club's dire financial situation.

He is understood to have accepted a payment of £30,000 from the administrators as a final settlement, although he was due much more under the terms of his contract.

One issue remains outstanding. A report by Brendan Guilfoyle of the P&A Partnership, who acted as co-administrator, into the conduct of the directors who presided over the spectacular spending spree and subsequent fallout, has been completed but remains lodged with the Department of Trade and Industry.

The department could still take action against the likes of Ridsdale, the former deputy chairman Allan Leighton and McKenzie if it is decided that they were no longer fit to be directors as a result of their actions during their time in charge of the club.