A cash-strapped local authority has revealed plans to ‘take appropriate legal advice’ after a prep school failed to pay back a multi-million-pound loan.

Woking Council, which officially declared itself bankrupt in 2023 following a number of risky commercial investments, lent Greenfield School in Old Woking £13.3m between 2019-2021.

But the school has since missed a £2.4m payment deadline, insisting it is short of cash.

Instead, the private school offered to give the council one of its surplus buildings, worth considerably less than the outstanding debt.

The council, which is in the process of offloading assets to pay off its own debts, told the school in November that it did not have the capacity to take on any additional buildings.

And the two sides now appear to be at a stalemate, with questions asked at a recent council meeting as to its next move.

Councillor Dale Roberts, lead member for finance, said: “We made it clear that the strong preference of this council was that the school simply met their existing commitments.

“They are also aware that they are required to provide independent and professional advice on the viability of their plans to repay.

“Our needs must be front and centre to provide assurance that the school will be able to honour any revised terms and of course that means not just the repayment in November last year, but for the whole of the arrangement.”

He also hit out at the previous council administration for agreeing to the loan in the first place, calling it ‘ultra reckless’.

The council is now considering legal action to recoup the debt.