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The Council Loan


Twitters

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As far as I can understand from reading The Sentinel, the council's £1.8m loan payment remaining is a secured debt.

 

I assume therefore this means anyone taking over the club has to pay off all £1.8m or risk losing Vale Park?

 

If that's the case I would expect a new loan arrangement to be negotiated by the new owner.I would not expect anyone to pay that amount straight away.

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21st March, 13:49 #4

Howjy04

Senior Member

Join Date: Jan 2011

Posts: 4,414 Quote:

Originally Posted by Twitters

As far as I can understand from reading The Sentinel, the council's £1.8m loan payment remaining is a secured debt.

 

I assume therefore this means anyone taking over the club has to pay off all £1.8m or risk losing Vale Park?

 

If that's the case I would expect a new loan arrangement to be negotiated by the new owner.I would not expect anyone to pay that amount straight away.

 

No-one has to pay it straight away. At the moment it is over another 14 years, no reason to think it is going to be much different under a new owner.

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Twitters is right and this will be the reason why people need time to decide on their bids. You are literally bidding to buy a large debt. The council don't worry me. Its the loan sharks who miller approached. Idiot bloke. Why oh why oh why?

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Would imagine the new 600k loan would be added to the 1.8m and the new owner would negotiate with the council on new terms and conditions to repay it, the loan would be secured against the ground.

 

I think I'm right in saying that the £600k would have to be paid back immediately by the new owners.

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The Council should be happy with terms that get the loan repaid as envisaged in the original contract or over an extended period with appropriate interest. So there are two core questions really. Can a new owner put together a viable business case that includes that loan repayment expense and turn a return on investment that is acceptable? Secondly, can the new owner pass the Council's due diligence so that they support the creditors voluntary agreement.

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Is it possible the administrator could investigate the terms under which the Gibraltar loan was taken out, and try to have it declared ultra vires or reclassified as an unsecured debt?

 

I think the above is an important issue. There is a point about whether the loan taken out was ultra vires because of procedure. Even if it isn't there is an argument that directors failed in their duties including trading insolvently. Both raise questions about the personal liability of the directors and whether responsibility falls on them rather than the corporate person - the company and club. Of course without the facts it is impossible to say much more. I am not clear if the administrator would seek actively to reclassify a loan like that, but I guess he would seek to ensure it is correctly classified.

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What do most creditors get back in this type of situation? 20p in the £?

 

At the press conference it was asked and they said there is no hard rule, they have had C.V.A's with 100p in the pound to 1p in the pound

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