LEEDS United have failed in a High Court bid to strike out a winding-up petition hanging over the club’s head.
The Championship club were in court after creditor, Sport Capital Ltd, decided to call in a £950,000 loan made to United last year.
Lawyers for the club said it was not a case of “cannot pay”, but “will not pay”, because they contested whether a valid debt to the company existed at all.
But after an afternoon hearing in London’s Companies Court, Deputy Registrar Christopher Garwood rejected the club’s case and gave it 13 days - until a week on Monday - to pay.
The registrar said that, although the club’s bank account had been frozen, new owner Massimo Cellino was footing other bills and could find the money to pay back the loan.
Earlier, the club’s barrister, Rory Brown, had argued that the club owed Sport Capital nothing.
All of the evidence suggested that the loan had been made directly to the club from the man behind the company, former United director David Haigh.
“Everything in this case suggests that the loan was from Haigh,” he said.
“If one looks at the agreement, the benefit goes to Haigh. The money came directly from Haigh.
“The money never touched the petitioner [Sport Capital]. It went straight from Mr Haigh’s account.”
Mr Brown said the club was also concerned that the money, if it came from Mr Haigh, might be tainted, given his recent arrest in a fraud investigation in Dubai.
And he said counter-claims which the club has against Mr Haigh himself would potentially “extinguish liability” for the loan.
Denying that the club is insolvent, the barrister continued: “There are funds readily available to pay. This is not a ‘can’t pay, won’t pay’ situation. This is a ‘can pay, won’t pay’ situation.”
Giving judgment, Deputy Registrar Garwood said the fact that the money came from Mr Haigh’s account, and not from Sport Capital, did not mean that he was the lender.
It was “obvious and clear” that the lender was Sport Capital, he said.
The club, having received a demand for payment and done nothing about it, was now “scratching around” looking for ways to address the problem.
“They did not seek to engage with Sport Capital in terms of paying or negotiating for time to pay, or even raising issues as to payment,” he said.
“The view was simply taken: we will ignore it.
He added: “The club is the author of its own misfortune.”
Mr Brown told the Deputy Registrar that the club now intended to pay in the light of his ruling. The case will return to court a week on Monday when the winding-up petition will be dismissed if payment has been made.
The club was refused permission to appeal.