Dear Department of Internal Affairs,

Dear Enquiries / Mr Mark Butcher, CEO

You have not acknowledged receipt of [email address]
dated 19th September 2023, and so I repeat this:

Thankyou for your response.

In your response, you have stated;

“LGFA cannot seek to recover this amount from other local authorities.”
and
“Local authorities do not provide a guarantee of another local authority's debt.”

Your response also states;

“When LGFA borrows money, its obligations are guaranteed by most of the local authorities who participate in the LGFA borrowing structure (LGFA Guarantee).”
and
“If a guarantor fails to pay its pro-rata share of a demand under the LGFA Guarantee, the Security Trustee will make further demands on the other guarantors for payment of the unpaid amount on a pro-rata basis until the outstanding amounts are paid in full.”

It is worth noting here, that your ‘LGFA An Overview’ document on your website also states;
”…[a] council… [who is a guarantor], [provides] a guarantee [which] will be in favour of the obligations of LGFA. Any call under the guarantee will be allocated across *all the guarantors* on a pro rata basis in relation to their rates revenue.”

Your ‘Amendment and Restatement Deed (Guarantee and Indemnity)’ [document 3756987 v6] it states;
3.4(b)
“…[LGFA] shall deliver a Demand to each Guarantor requiring the Guarantor to pay the proportion of the relevant amount…”
and
3.4(c)
“…if one or more Guarantors fails to pay in full its Relevant Portion of a Relevant Amount… …the [LGFA] may deliver a further Demand to *each Guarantor other than the Defaulting Guarantors requiring that Non-Defaulting Guarantor to pay the proportion of the Shortfall Amount…”
“…for each Non-Defaulting Guarantor , its *Additional Relevant Proportion*…”
and
3.4(d)
“…if one or more Non-Defaulting Guarantors fails to pay in full its Additional Relevant Proportion… …the [LGFA] may deliver a further Demand to each other Non-Defaulting Guarantor… …shall apply to the relevant shortfall amount *and such other Non-Defaulting Guarantors…”
and shall
“…continue to apply until the Relevant Amount has been paid in full to the [LGFA].”

My points and hence the questions are;
1. Your statements made in response to my original OIA seem incorrect; is it not true that whilst a council (Guarantor) may not be directly responsible for a “Defaulting Guarantor's” specific or actual debt, however a council (Guarantor) may receive a Demand as a Non-Defaulting Guarantor, and

2. To clarify my question around a councils protection from other defaulting Guarantors (question 4), and given clause 16.9(d) of the aforementioned deed, is there no limitation to the continuance of the Demand to Non-Defaulting Guarantors, OTHER THAN those specified in clause 3.4 (a) - (d) where the Demand is a proportion of the Relevant Amount based on a pro rata allocation of the rates revenue?

Yours faithfully,

Andrew Mitchell