2.20 PFI guidance recommends that the contract should address what happens to the assets involved, when a contract terminates either prematurely or at expiry. Assets with no alternative use and still required by the public sector should revert back to the public sector at no cost. Guidance also states that, as security, the banks will usually insist on a right of assignment to themselves of all the private sector party's rights under the PFI contract. Such rights are to be transferred under the direct agreement to the public sector in the event of contract termination in return for a compensation payment. The banks are also to release any security they have over the assets involved.13
2.21 The 1993 contract documents however did not allow for possession of the museum to revert immediately to the Armouries if it sought to terminate the contract with RAI for RAI's insolvency (paragraphs 1.67 to 1.69). It is possible that, if RAI had gone into receivership, a payment to the Bank would have enabled the Armouries to possess the museum relatively quickly, but the amount of the payment required by the Bank could have been substantial (paragraphs 1.70 to 1.71).
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13 Standardisation of PFI Contracts paragraphs 18.1.2, 19.2.1, 23.5, and 30.3.8