On a knife edge

The takeover bid was threatened by a disagreement at today's crunch meeting of creditors at Bootham Crescent over the amount of cash due to the Inland Revenue.

Initial indications were that the Inland Revenue had agreed in private to accept a revised offer put to them at lunchtime but when it came to the crunch they wanted more time to consider the offer.

The U-turn came after a hectic bout of talks which ended in what the Trust thought would enable them to take control of the cash-strapped club.

The takeover by the Trust is now on hold and funds will now have to be found to keep the club going for another seven days.

The Trust have again agreed to stump up the necessary funds to run the club for the next week, alhough it it not know at this stage just how much money will be needed.

That casues problems for the Trust however, because the money will eat into the funds the supporters' group had earmarked for their takeover deal.

The new meeting of creditors will now take place at 10.30pm Monday, March 24.

This afternoon's dramatic late twist followed a day of tense negotiations at Bootham Crescent .

Originally, Matthew Bowker, of administrators Jacksons Jolliffe Cork, told the Creditors' Voluntary Agreement meeting, attended by around 50 creditors and their representatives, that the Inland Revenue and Customs and Excise had rejected the Trust's offer under their proposed Company Voluntary Arrangement.

Bowker explained around 90 per cent of the value of the creditors either attending the meeting or voting by proxy had indicated they were willing to support the Trust's bid.

That percentage would have been enough to see the proposed CVA sanctioned.

However, Bowker said without the tax authorities also giving their support it was unlikely the Football League would rubber-stamp their bid.

Bowker said an offer of 20p in the £1 had been rejected by the taxman and said the adjournment was needed for more frantic negotiations to be held between his company, the Inland Revenue and Customs and Excise.

Bowker said the tax authorities were insisting its dividend should match those of the club's 'footballing creditors', who under the terms of the CVA would receive any monies owing in full.

However, he explained had the football club gone into liquidation at the turn of the year, the Inland Revenue and Customs and Excise would have still received only 20p in the £1.

And he revealed if the Trust's offer was to now fail then the taxman would receive no monies whatsoever.

The meeting, which started at 10.20am, was finally adjourned more than an hour later after many creditors expressed their dissatisfaction with the way Jacksons Joliffe Cork had conducted the period of administration. When the meeting resumed in mid-afternoon the view was that a deal had been agreed by the Inland Revenue. However, the tax man's representative wanted more time to consider the offer.

Under the terms of the CVA, an undisclosed proportion of the £161,000 due to preferential creditors like the Crown (tax authorities) was due to be retained by the administrators to cover their fees

Bowker confirmed his company's fees for running the club during the period of administration could eventually reach as much as £200,000 - more than was available to meet the costs of the exercise.

In effect, for the Crown to be satisfied with their dividend it was suggested at the meeting that Jacksons Jolliffe Cork should give up more of their fees.

A number of creditors queried why today's 11th hour development had not been anticipated earlier and why the administrator had not done more to cut costs at the club during the previous two months.

Others maintained JJC had given too much credence to the take-over bid proposed and headed by former chairman John Batchelor and John Heynes.

Critics said the Trust had been discouraged from submitting its own offer while the administrator focused his efforts on trying to realise a deal with Batchelor.

That deal never materialised and ultimately it was left to the Trust to stump up £92,000 followed by a further £60,000 donation to fund the club while their offer was finally considered.

Bowker, however, made a strident defence of the work of his firm and said the company had worked very hard to try to engineer a satisfactory outcome.

He said the necessary paperwork had been sent out to the taxman in good time and talks had begun last week only for the matter to come to a head on Friday.

Bowker rejected claims his company "had backed the wrong horse" in terms of negotiating a possible takeover deal with Batchelor.

His colleague David Willis insisted the Trust had indicated to him at that time that their bid should be treated as an "option of last choice" - a claim rejected by Trust members at the meeting -and the Trust's initial bid for the club was just £50,000.

Bowker defended the high costs of administration, saying the alternative would have been to have seen City liquidated at the start of the process. He said during the period of administration a potential solution to the ground problem had been achieved, the players had been paid and the club was still playing.

"From where we were on day one it has taken a significant amount of time to get us to the stage where last Thursday we anticipated we would have a deal," he said.

"I am candid about the costs, it is a big number."

Updated: 15:11 Monday, March 17, 2003