Cardiff gain time in dispute over £24m debt
Thursday 20 March 2008
The FA Cup semi-finalists Cardiff City were rescued from the brink of financial disaster yesterday when a High Court judge rejected a bank's bid to secure the immediate repayment of up to £24m.
The judge said the club had "a real prospect of a successful defence" and should not be subjected to a summary judgment.
Langston, a Swiss investment bank, is suing the Welsh club over loan notes which it holds. Langston had sought "summary judgment" – meaning that the club would be forced to pay up immediately. But Mr Justice Briggs, sitting in London, dismissed the claim.
As a result, the case will go forward to a full trial of the complex issues involved. The judge said the case was "clearly unsuitable for summary determination". He refused Langston permission to go to the Court of Appeal.
The judge was invited by both sides in the dispute to delay the full hearing of the case for two months, in the hope that matters can now be resolved without the need for further court action.
The Championship club, still savouring the FA Cup quarter-final victory against Middlesbrough two weeks ago, had faced possible administration if Langston succeeded in its claim.
Langston's counsel, Michael Driscoll QC, told the court it was common ground that Langston was a substantial creditor of the club and that the debt owed to it was in excess of £15m. It was also common ground that Langston loaned £24m to the club in 2004, and it had yet to be repaid anything. It was the club's case that nothing was payable at the moment. The judge extended the time limit for Langston to renew its application for permission to appeal to the Court of Appeal until 10 June.
Announcing that a two-month stay on the action had been agreed, the club's counsel, David Wolfson, said: "It has always been the club's aim to reach a settlement without incurring further legal costs and, over the next two months, we hope very much to do that so we can concentrate on matters on the field where, I'm glad to say, we have enjoyed some success."
The judge wished the two sides "every success" in their attempts to resolve the dispute.
Cardiff's chairman Peter Ridsdale said: "I'm relieved. I think that we have always accepted that we owed Langston £16m and the proceeds of the naming rights of the new stadium, up to a maximum of £9m. We feel that the action over the last seven months has been strangling the club and has been unnecessary.
"We would expect anyone who has a difference of opinion to sit down and come to an amicable conclusion but all that happened was we were dragged through the courts, which was very expensive and time-consuming and stops the process of raising cash which could have gone towards resolving this dispute.
"I sincerely hope they will sit around the table and realise that an amicable situation is the only way forward for both parties."
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