Interesting, Diogenes.

So is this the answer? The council take control and liquidate, owing the creditors, RBS and Allam, millions?

Would a local authority legally be able to buy/obtain a company:

a) knowing the amount of debt to be millions, and

b) with the intention to purchase in order to liquidate.

Is it legal for the council to obtain the SMC under these conditions?

According to their accounts, the SMC made a loss of £33k from its day to day running of City, Hull, Airco and "others".
A surprising loss when you consider the success City is having at the moment, especially compared with 10 years ago.
Even more surprising, you might say, are FC's massive costs.
However, the real debt comes from the RBS mortgage, new pitch, floodlights etc, which are all being funded, it seems, by loans from Mr Allam.
To put it another way, the SMC didn't make enough profit to contribute anything towards these "extras".
Makes you wonder, doesn't it.

If the council buy the SMC and put it into liquidation shortly afterwards it may well be fraud. Leaving the directors appointed by the council open to a criminal prosecution and any councillors that voted for such a strategy to personally pay for the losses that would follow.

The SMC's last accounts (2014) show about £2 million owed to the RBS under the terms of the guarantee given to its holding company and over £6 million to Hull City Tigers Limited.

Even with the costs of an ageing ground that needs repairs, it should be easy to make a profit on a ground that has minimum crowds of 23k and 10k for football and rugby every other week almost year round, that is a lot of overpriced beer and food, and bigger crowds than say the John Smith's and DW stadiums get for the same sports and they are older grounds. That's before you add in extra events like business expo's one off international sports ties, functions in the bars, the infamous polo and squash contests...

If you were starting from scratch, most probably. But with tenancy agreements that were written to work for clubs who at the time were not getting those numbers through the gates, it isn't so straightforward. Which is why it wasn't attractive to a normal, independent SMC, and City took it on instead.
While all partial accounts must be taken with a pinch of salt, it has never been a gold mine. FC aren't really in a position to pay more, and neither they nor City have an incentive to.
Comparisons with other stadiums will be difficult because deals are structured in different ways. Is the John Smith's the current name of the MacAlpine/Galpharm? Hudds own a share of that iirc. And while Hull certainly pay a lot, the SMC covers covers stuff like stewarding iirc, which may not be the case everywhere. I don't think Rovers get it under the famous peppercorn rental agreement. Could be wrong, often am.
All that said, if you want to test your theory and earn £60k pa...

But isn't having Larger crowds a benefit to the SMC not the clubs? (as I understand it...)

Me to what we need is a full audit so while on about the Air-cool Arena the council should demand this at same time as Allams not forth coming when asked when they wanted to offload it for £1 to the Council.

Hello Man-in-the-sand, and welcome.

Thanks for answering my question - it's impossible to the council to legally take over the SMC and immediately liquidate knowing the financial situation.

I guess its a similar situation as to when Allam expected to be gifted the stadium and objected to the council's refusal - there are personal as well as moral and legal implications for the councillors.

I know the last SMC accounts to 2014 showed the RBS debt as still outstanding. Allam has gone on record as saying this debt has been repaid - is that since the last account submission or is he once again waxing lyrical for the media?

I understand the current SMC debt remains (approx) £2M to the bank and £4M to Allam himself. Am I correct?

And (sorry to bombard), but do you think there are sufficient grounds to terminate the SMC lease. this is the woolly point I can't believe Allam would leave himself exposed to. I'm of the belief he knows his lawyers are good enough to prove compliance. . Just my hunch, from observation of his previous...

I think Mr Allam's trump card is the fact that the council (allegedly) allowed Bartlett to mortgage the SMC to the tune of £4m, which, in effect, allows any owner of the SMC to indebt the company for any amount, despite the fact that it has no tangible assets.
The SMC accounts suggest to me that Mr Allam has made sure that the SMC owes him as much as is possible.
How he's done this, I'm sure, is perfectly legal and above board.

If and when he goes, all these debts will be paid off by the new incumbent , and he won't have paid for anything.