The liability to repay a loan made by the LA to a maintained school, would normally transfer to the academy, which would continue repayments from its revenue budget on the previously agreed schedule, unless the LA and school agree to liquidate the loan and pay it off at the point of transfer.
The transfer of responsibility for the loan should be reflected in a legal agreement between the LA and the AT, either by amending the Commercial Transfer Agreement (CTA) or in a separate agreement.
The Education Department will not recognise as a loan any arrangement that is agreed between the LA and a maintained school after the governing body or Interim Executive Board has made an application to become a sponsored academy or after the school becomes eligible for intervention by the Secretary of State, unless the Academy transfer sponsoring the academy has agreed to take on the liability.