GEORGE REYNOLDS is facing a bankruptcy hearing after the financiers who loaned £4m to Darlington Football Club launched legal action against him, The Northern Echo can reveal.

The Sterling Consortium, the finance group that holds a mortgage on the Reynolds Arena, has petitioned to have the former Quakers' chairman made bankrupt.

A statutory demand is understood to have been served on Mr Reynolds on January 22, just under a month after cash-strapped Darlington went into administration.

A bankruptcy petition was issued on February 26.

Durham County Court confirmed yesterday that the hearing would take place on Wednesday, April 14.

It is not yet known whether it will be held in private chambers, but it will be before District Judge Marley.

Sterling loaned money to the Quakers, at an interest rate of 15 per cent, to finish work on the stadium. The group declined to comment on the bankruptcy hearing last night.

The hearing is the latest blow for Mr Reynolds - who once claimed he had a personal fortune of £247m and was almost as rich as the Queen.

After saving Darlington Football Club from disaster in 1999 and masterminding a move to a new stadium on the edge of town, he was forced to place the club in administration to avoid a winding-up order. Shortly afterwards, he stepped down as chairman and director.

Since then he has been waiting anxiously to hear if a rescue deal could be found to save the club.

Mr Reynolds is the Quakers' largest unsecured creditor. He claims he is owed almost £20m, although the last available accounts for 2002 only reveal a debt of £5.6m.

If he is declared bankrupt, however, Mr Reynolds would find his property and assets at risk.

A bankruptcy hearing also has the option to dismiss the petition, suspend the proceedings pending further information, or refer the case to an insolvency practitioner to set up an individual voluntary arrangement between Mr Reynolds and his creditors.

Last night, he remained defiant, saying: "Jesus was crucified for helping people, so what chance have I got? This is normal procedure - beyond that, I don't wish to comment."

He has previously revealed that he was forced to re-mortgage his home - the £7m Witton Hall, at Witton-le-Wear, near Bishop Auckland - to keep the football club afloat.

Mr Reynolds was pinning his hopes on a rescue deal for the club spearheaded by mystery businessman Ted Forster.

Mr Foster is due to fly into Teesside today from his Greek base with a £4m cheque made payable to George Reynolds as part of his bid to take over the Quakers.

Mr Forster, who claimed he would pay creditors almost all they were owed, said he would come to the North-East this week after declaring that he was on the verge of becoming the Quakers' new owner.

The 53-year-old is planning to attend Saturday's home match against Cambridge United, his first visit to the club's new home.

Last night, administrators Wilson Field said there was nothing to prevent Mr Forster pressing ahead with the deal, provided he came up with the money to satisfy other creditors. Joint administrator David Field said: "If he can pay off George to become the major shareholder, he can apply for the administration order to be discharged.

"Our only interest is getting the best deal for creditors. If the court is satisfied that the money is there to pay off the creditors, we would be delighted to support it."

In the meantime, administrators will continue to draw up a company voluntary arrangement - a deal to keep the club out of liquidation - as a fall-back option.

* The documentary, George Reynolds - Playing By His Own Rules, will be repeated nationwide on BBC2 on Tuesday. It will include updated footage.

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