Bradford Council has vowed it will continue to take action to ensure a commercial loan made to Bradford Bulls is repaid amid the club’s change of ownership.

The authority is understood to have granted the Super League club a £200,000 loan – which must be paid back with commercial interest – shortly after restaurant boss Omar Khan took the helm in September 2012.

However, an agreement in principle has now been struck for Mr Khan to transfer his shares in the club to local businessmen Ian Watt and Andrew Calvert, which led Councillor David Robinson (Lab, Wyke) to ask the authority how that would affect the loan’s repayment.

At a full Council meeting, he asked: “What arrangements have been made to ensure the repayment of the loan to Bradford Council is made by the previous owners of Bradford Bulls?”

In response, the authority clarified the loan had been made to the company that runs the club, OK Bulls Ltd, and not the previous owner directly.

But it stressed the previous owner, Mr Khan, had signed a separate guarantee as security for the loan.

In its written answer, the Council said: “There are currently negotiations taking place about the transfer of ownership of the shares of Bradford Bulls, which by their very nature are commercially confidential.

"The Council has security in place in respect of the loan, by means of a separate guarantee signed by the owner who is now seeking to transfer ownership.

“The guarantee of the loan cannot be transferred to a new party without the Council’s consent.

“The Council is in close contact with the Rugby Football League which is leading the negotiations on the transfer of the shares. The Council will continue to take action to ensure that tax payers’ interests are protected through the repayment of the loan or by invoking the guarantee.”

A spokesman for Bradford Bulls last night said the club could not comment on the loan due to the confidential nature of the discussions. Mr Khan was not available for comment.

The Council’s previous commercial loans include one of more than £6 million to Northern Irish construction company McAleer & Rushe in 2009 so it could complete the £45m Southgate complex in the city centre.