Enterprise Insurance, the shirt sponsor of Leeds United, has withdrawn the winding-up petition it issued against the club last month.
The petition - served on Leeds on January 29 - was withdrawn after a hearing at the High Court in Manchester today.
United were threatened with a winding-up order over a sum of £1.5m borrowed from Enterprise Insurance in 2012 but the club repaid the money with interest ahead of this morning’s hearing.
Leeds were ordered to meet the costs of the legal case but His Honour Judge Hodge QC.
In a statement, Enterprise Insurance said it had taken action against Leeds after “the club’s solicitors claimed in correspondence that there was no debt to Enterprise.”
The firm took out an injunction against Leeds following the club’s insistence that the attempt to reclaim money owed was “an abuse of legal process.”
Enterprise’s solicitor, Michael Ozon, said: “While we are pleased the court ruled clearly in favour of Enterprise, it is regrettable this matter had to end up in a hearing before the court.
“Enterprise Insurance acted responsibly and with great care for the club. It offered to withdraw its petition on the basis that the club agreed to comply with its contractual obligations in relation to the payment of certain monies due.
“Despite repeated requests, no undertakings were given and the club simply failed to engage. Enterprise was left with no choice but to take action seeking injunctions to compel the club’s owners to comply.”
Andrew Flowers, the company’s managing director and a man involved in a failed by to buy Leeds last month, said: “Not only did they refuse to accept liability for the substantial sums owed but they challenged our petition on the grounds that it was an abuse of process.
“To add insult to injury, (Leeds) then told the High Court today that Enterprise should have sought to appoint a provisional liquidator instead of pursuing an injunction.
“I was not prepared to act in this way out of a genuine concern and repercussions for the club. While I am bound to protect our company’s interests, I am nevertheless a lifelong supporter of Leeds United and would not want to damage the club in any way.”
The winding-up petition against Leeds was due to be heard in the High Court on March 17 but the case has been cancelled.
The club are understood to have repaid around £1.6million to Enterprise, including interest. Legal costs are expected to run to £100,000.