THE company chosen to redevelop Alexandra Palace is suing its guardian for £6.2 million.

Developer Firoka signed a 125-year lease that was later quashed, and is now suing Alexandra Palace Charitable Trust for loss of earnings.

Palace bosses received the claim on Friday and it is now being looked over by their lawyers Howard Kennedy.

The trust, made up of Haringey councillors and chaired by Councillor Pat Egan, refused to confirm or deny if there were any plans to file a counter-claim.

"We are ruling nothing in and ruling nothing out," Mr Egan said.

"It is a drain on resources. Our biggest regret over the last few years is that we have not secured a future for the palace to turn it into something that can be enjoyed by everybody. Critics are quick to say what they do not want but no one can say what they would like to see.

"I would love to say more but my hands are tied. Anything that is said at this very early stage could jeopardise future proceedings."

Firoka, headed by millionaire businessman Firoz Kassam, planned to develop the former television studios into a leisure complex with hotels, casinos and bars.

But a lease authorised by the Charity Commission was quashed in a High Court battle after a judge ruled no proper consultation with the community had not been held.

In an attempt to keep Firoka in the picture, the trust, then chaired by councillor Matt Cooke, allowed the company to continue trading at the palace until a second lease could be signed.

From October 2007 to January 2008, Firoka was allowed to keep profits raised from events — while the council picked up the hefty bill to maintain the site.

The quashed lease also meant the council suffered a £1.5 million overspend after leaving no provision in its budget to balance palace books.

As Firoka’s interest in signing a second lease began to wane, the trust asked for written commitment to the partnership.

When this failed to appear, Firoka was kicked out of the palace and the Alexandra Palace Trading Company took over.

David Loudfoot, palace general manager, confirmed that last year the palace received £2 million from the council to fill the financial black hole.

A further £2m will be paid in the coming financial year.

Palace profits are £500,000 a year and the same is projected for 2009/10.

In the current economic climate the profit margins were "good", Mr Loudfoot said.

Robert Gorrie, leader of Haringey Liberal Democrats, said: "This is an enormous claim. Simply trying to respond and defend the council’s position will cost residents thousands of pounds in legal bills and council officers’ time.

"The amount of the claim is more than the council spent this year on safeguarding vulnerable children. Residents are again being put at risk as a result of the latest in the long list of the Labour council’s mismanagement of Alexandra Palace and the borough."

Firoz Kassam, Firoka and Lewis Silkins, the lawyers acting on the company’s behalf, all refused to comment, but confirmed a claim was underway.