An attempt to have the company which controls Swindon Town FC wound-up should be dismissed, a judge has said.

Deputy Insolvency Judge Stephen Baister has ruled that the debt owed to American company AC Sports Wiltshire LLC, also known as Able, is “capable of being disputed on grounds that are not fanciful but of sufficient substance to warrant dismissing the petition”.

It is an effective win for the club after they had argued a winding-up petition was not suitable for this dispute.

But the saga is not over yet; Able have been granted permission to appeal and another firm, Centreplate UK, who are also owed money by the club have applied to take over the petition.

The case will be listed for the next available date in ten days’ time, where the judge will rule on whether to allow the substitution.

Meanwhile, he ordered Able to pay 75 per cent of the club’s legal costs.

Able had applied for a winding-up petition after claiming Swindon Town Football Company Ltd, the firm that owns the League Two side, had not repaid a £100,000 loan.

A winding-up petition is generally a last resort for creditors to obtain their money back, and courts generally consider it when companies cannot pay their debts and should be wound up so it can be liquidated and the assets can be distributed among creditors.

In a hearing at London’s Insolvency and Companies Court last month, Adam Deacock had said that the company had entered into a loan agreement in November 2019 with Able with the intention of using the funds to pay overhead costs and staff wages. The loan was not to be used to pay creditors.

But on receipt of the funds, Mr Power paid himself back. He said in a witness statement this was because he had already paid for the costs out of his own pocket.

The following February, Mr Power spoke to Bill Keravouri at Able to say the club’s financial position had worsened and he requested more time to pay, when it was agreed it “could be treated as a deposit against a purchase”, Mr Deacock said.

Town had argued that the loan agreement was a sham and that the petition was brought with improper motive.

David Eaton Turner had said that Able wanted to gain control of the club. It comes after Mr Power was forced to sell Swindon Town to Clem Morfuni’s Axis, and not Able as he had wanted to.

They also argued that the loan was actually a non-refundable deposit put down by Able in order to conduct due diligence with a view to purchasing the club.

But ruling on the case, Judge Baister refused Town’s submissions relating to an improper motive and ruled it was not a sham.

He said, however, that there was an “apparent inconsistency” in Mr Keravuori’s evidence. The judge cited evidence he gave to the High Court in 2021 in a case where Mr Power was forced to sell the club to Axis.

In his evidence, Mr Keravouri said that “preliminary due diligence began in November 2019”, and: “As a condition of Able’s commitment it agreed and duly paid the Club £100,000 for the due diligence exercise to continue.”

Judge Baister said this is “what appear[s] to be two positions adopted by Mr Keravouri which are potentially hard to reconcile”.

“If the £100,000 was used to fund due diligence, it must be arguable that it no longer fell to be repaid.

“That does not accord with the position the Petitioner now takes in its evidence in these proceedings.”

He continued: “A fuller story of how the loan was treated from time to time has only emerged as a result of opposition to the petition.

“That leads me to suspect that even more might emerge if full and proper disclosure… is given and the witnesses are cross-examined.

“In my view, the Company is entitled properly to test the Petitioner’s case, which it cannot do in a summary proceeding such as this.”

Judge Baister said matters “could have been cured by an application to amend and reverify the petition”, which is now out of time.

“I simply say that it adds to the lack of clarity as to the petition debt and its true contractual basis or nature after the oral agreement.”