Chester City could fold in just eight days time after the Inland Revenue filed a winding up petition in the High Court. The Club, Conference winners in 2004, owe £180,000 in unpaid tax.
Update - The BBC Website also reports Chester City Council have issued a writ against the Club for £46,000, arising from the Club not paying rent on the Deva Stadium for two years.
Chester chairman Stephen Vaughan denied the Club was about to close, adding that he had arranged for his accountant to pay the money by Friday and had already paid over £300,000 to the Inland Revenue and Customs and Excise this year.
"We are in something of a financial straitjacket at the club currently, in as much as we are restricted in what we can do at the Deva Stadium complex because of the terms of the lease." Mr Vaughan told the Liverpool Daily Post.
"There are a number of initiatives that we would like to undertake in and around the stadium, which would be beneficial to the club and its finances. Under the current terms of the lease agreement we are basically restricted so that we can only generate finance on match days and this is extremely restrictive.
"The original lease was agreed between a previous board of Chester City directors, the constructors of the stadium Morrisons, who are now under new ownership, and the city council. I am keen to get around a table with all the interested parties in order to find a suitable and agreeable way forward. We have been chasing arrears since the day I walked into the club. We were £3m in debt when I took it over and I loaned the club that amount plus about another million. What I'm doing now is balancing the books."
Vaughan believed that the Club require average gates of 5000 rather than the current 3100 - "The long term future of the club when we started out was to get back in the football league and climb the divisions. In order to achieve that we have to overspend to give the manager a fighting chance. We are three points behind the leaders so we are on course."
Vaughan admitted in early 2004 that the Club was losing £65,000 a month, and later accused former manager Mark Wright of overspending and signing players to contracts without Board approval. Chester reputedly had a weekly wage bill in excess of £25,000 during their Conference championship campaign. Vaughan has always been a controversial Chairman, and attempted to buy a 23.2% stake in Everton in the summer.