Video: Bankers pull tax crisis Owls back from the brink

The Owls and the Co-operative Bank spent all yesterday seeking a solution to an unpaid tax bill of 1.1m which has landed the club back in the High Court today following an adjournment in proceedings last month.

Late in the day, the bank agreed to fund a payment of 780,000 to HM Revenue and Customs (HMRC) – the amount sought under the winding-up petition – to buy more time to find a longer-term answer to crippling debts which now total around 30m.

The club had the petition struck out at today's hearing, with the agreement of HMRC.

Hilary Stonefrost, representing the bank, said it was prepared to pay the 703,000 debt if HM Revenue and Customs withdrew its winding-up petitions against Sheffield Wednesday Football Club and Sheffield Wednesday PLC.

Registrar Christine Derrett approved the settlement after hearing HMRC would dismiss the petitions.

The club was given 28 days last month to pay up after High Court registrar Peter Nicholls was told the football club had already made a "substantial payment".

Hugo Groves, representing the club, had asked for the adjournment of the winding-up petitions after saying money from the sale of players had been used to reduce the outstanding PAYE balance.

"There are also very serious and advanced negotiations for the sale of the club," he said.

But having avoided the threat of imminent administration, without fresh investment the club is likely to find itself in a similar situation in the near future. The Owls cannot meet current outgoings and one month's tax bill of around 300,000 is already overdue.

The Co-operative Bank is owed around 25m and has been reluctant to commit further funding to the League One club. The bank is pressing the club to secure a takeover rather than extend its debts still further.

It is understood one investment group, believed to be from the United States is undergoing a due diligence process but it is not known if it has provided sufficient proof of funding.

David Blunkett, MP for Sheffield Brightside and Hillsborough, has been assisting Wednesday chairman Howard Wilkinson with negotiations.