A borough council may lose more than £10m because of its local football club’s financial troubles.
Northampton BC used its ability to borrow cheaply to raise £10.25m, which it loaned on to Northampton Town FC in 2013.
This was to allow the club, known as The Cobblers, to increase the capacity of the Sixfields ground and build a hotel, corporate boxes, conference centre and a housing development on adjacent land.
Earlier this month the council imposed a deadline seeking full repayment of the loan after little of this work - from the proceeds of which the loan would have been repaid - had taken place. The club missed the deadline and is now up for sale.
But before the council could take legal action in response to the failure to repay the loan, HM Revenue & Customs imposed a winding up notice for unpaid debts on the Sky Bet League 2 club having the previous week taken a similar order against County Developments (Northampton), which was to have carried out the associated housing development.
A council spokesman said it had required repayment of the £10.25m as “the chairman has repeatedly informed us that the council will be repaid in full when the club is sold but the sale does not seem to be proceeding at this point.
“The last two repayments have been missed and the club has not given the borough council confidence in their ability to pay these and later repayments.
“The council is also aware that there is a petition to wind up County Developments Northampton Limited, the company working on the development around the club, in the High Court.”
After HMRC issued its petition, a second council statement said: “We are contacting HMRC and are requesting an urgent meeting with them. Our priority now is to understand what is happening at the football club and the impact this action will have.
“When we have the facts on this, we will consult our legal advisors about the appropriate steps regarding our loan to the club.”
The opposition Labour group has called on the council’s auditor to hold an inquiry.
Club chair David Cardoza said: “I understand and accept the urgency, I understand the importance and I am doing everything possible to remove the uncertainty surrounding the club as soon as possible.”