OFFICIALS at the Stadium Management Company which runs the KC Stadium are locked in a legal battle with Royal Bank of Scotland (RBS) after refusing to repay a £2.25m debt, the Mail understands.
The wrangle is thought to date back to a £3.5m loan taken out by a private company associated with the SMC prior to Assem Allam's takeover of Hull City.
The validity of the loan, and how it was issued by RBS, is at the centre of the legal dispute, even though £1.25m has already been repaid.
Mr Allam, who now owns the SMC, is unwilling to repay the outstanding balance because he feels the loan was wrongly issued to a company which should never have had any legal rights against the SMC.
However, a writ has now been issued by RBS for the outstanding £2.25m.
Although the dispute is complex, and now in the hands of Mr Allam's lawyers, the City owner is willing to take it to the High Court in order to get the loan declared non-repayable.
Mr Allam claims any mortgage or loan issued against the SMC would have legally required the signature of a Hull City Council official, as they are the owners of the stadium, which is on a long-lease to the SMC to run on a daily basis.
It is thought the City Council had no involvement in the loan application.
Last night RBS had made no comment despite being contacted by the Mail. Mr Allam also declined to comment.
