Liverpool hails recovery of £3.5m debt as ‘right course of action’ for a commercial council
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A city council has retrieved £3.5m—£2m in lending plus £1.5m in interest—after placing a pharmaceutical company into administration earlier this year.
Liverpool council has been pursuing the cash from drug development company Redx after it failed to meet repayment deadlines for the 2012 loan.
Redx and its subsidiary, Redx Oncology, were forced into administration in May by the council. This week administrators FRP Advisory announced the patents, contracts and other intellectual property had been sold to rival firm Loxo Oncology for $40m.
A spokesman for Liverpool City Council said: “The decision by the city council to call in the administrators was not taken lightly,” adding that the “announcement proves it was the right course of action when local authorities are seeking to be more commercial in their approach.
“The council have worked with independent legal and financial advisers throughout the loan period to ensure it maintains a robust approach to managing its investments.”
A statement to the London Stock Exchange said Liverpool originally made the loan to Redx in June 2012 for repayment after two years. The term was extended for a year in 2014 and then for another two years in 2015. The loan fell due on 31 March this year. Administrators were appointed in May. Shares in Redx listed on the Alternative Investment Market (AIM) were suspended.
Jason Baker, joint administrator of the company, said the “unconditional agreement is for the realisation of certain of the group’s intellectual property assets, the proceeds from which will allow for the creditors of the companies to be paid in full and provide working capital for the group’s continuing business, thus restoring the companies to solvency.
“The administrators anticipate that, upon their review and approval of the management’s final business plan, the company will be set to exit administration.”
The authority also welcomed the news that the “council has not only recovered the debt in full but welcomes the news that processes are in place to see the company continuing to operate as a business.”
Redx claimed earlier this year that it went into administration after the council rejected an offer to repay the debt in instalments.
Redx chairman Iain Ross said: “The board and its advisers felt consistently confident that we could have found the appropriate solution within a short period and can’t quite fathom why a creditor with whom we have had a good relationship for over five years is taking such an aggressive stance when they know, and have been provided with the evidence, that the company is making excellent progress on all fronts.”
But a spokesman for the council said that, despite the council agreeing previously to extend the repayment deadline by two years, Redx has “shown no willingness to make any repayment of any size”, despite it raising substantial funds from shareholders over the past few years.
Redx had been supported by the council as a leading player in Liverpool’s biotech sector until it relocated in Cheshire.
