SAINSBURY’S has put a £5million cap on the amount of cash it will loan to Southend United to clear outstanding debts.

The supermarket is locked in a deal to buy Roots Hall so Blues can move to a new stadium at Fossetts Farm.

Sainsbury’s will only loan the club about £1.8million more under a finance agreement reached just days before the club’s recent High Court clash with the taxman.

Details of the agreement are laid bare in case paperwork made available to the Echo by the High Court.

On Monday, HM Revenue & Customs withdrew an application to put the club into administration over unpaid taxes of £338,000, as long as the club avoids being wound up on August 11 over £140,000 owed to loan company Charterhouse Commercial Finance.

Evidence drawn up by the club to defend the administration application detailed how Sainsbury’s has agreed to lend a maximum of £5,071,711 to Roots Hall Limited, which owns the current ground and will in turn lend cash to the club.

However, the document showed nearly £3million of this had already been used since November, clearing earlier tax debts. Another £240,000 is due to be spent by next week clearing another tax bill and the Charterhouse debt, meaning the club has about £1.8million left from Sainsbury’s to deal with debts and taxes over the next 12 months.

The document stated: “On Friday, Roots Hall Ltd entered into a formal agreement with Sainsbury’s for the provision of a facility to the company [Southend United] to enable it to trade and pay its debts as they fall due.

“The Sainsbury’s agreement means the company would be able to discharge its future liabilities to HMRC as they fall due and those of trade creditors.

“The facility is such that it will provide funds for at least 12 months.”

A skeleton argument submitted to the court by HMRC disputed the club was solvent and could continue to function even with the loans from Sainsbury’s.

It stated: “It is notable that, even on the company’s own evidence, it is undeniably insolvent.”

The club said it will be able to lift a transfer embargo this week and get a full squad before the new season.