HERTFORDSHIRE County Council has overcome “immensely complicated” legal pitfalls and helped to secure a u30 million loan for a housing association.
Lawyers working on the deal have come up with a scheme which satisfies all sides, despite the recent Allerdale v Credit Suisse case which led to uncertainty over the legality of guarantees.
Banks were told to be wary of such schemes after the authority was judged to have acted ultra vires.
But in this case, the finance package was referred by the authority to its district auditor who in turn passed it on to the solicitor to the Audit Commission, Tony Child.
Quantum Care, a Hertfordshire-based charitable housing association, has now managed to secure private sector funding to enable it to build 12 new residential homes and to refurbish 14 existing homes for elderly people.
Quantum's solicitor Leonie Cowen, of London-based Leonie Cowen & Associates, says the deal involving Hertfordshire, Morgan Grenfell and a syndicate of four other banks took about two and a half years to settle. Each side needed to be satisfied that it was water-tight.
“The history of local authority guarantees and local authority deals has been extremely chequered,” she says.