Hicks and Gillett block Liverpool sale after defeat in High Court
Texas judge grants last-minute injunction while club chairman confident takeover by US businessman John Henry will still go ahead
Thursday 14 October 2010
The desperate attempt by Tom Hicks and George Gillett to hold on to Liverpool took another extraordinary twist last night when they managed to halt the sale of the club yet again – securing a temporary restraining order from a Texas court which was served on the club just five minutes before the start of a board meeting expected to ratify the new owner's succession.
On a night of extraordinary drama, even by the standards of the past eight days, billionaire businessman John W Henry, owner of New England Sports Ventures arrived at the London board meeting, expecting to be confirmed as the new owner and with plans to pay the £300m required to buy Liverpool today. Henry and his NESV chairman Tom Werner were also both preparing to be at Goodison Park on Sunday for the club's critical derby match.
But at 8.25pm, five minutes before the meeting was due to start, the Liverpool directors were served with the restraining order and when Hicks and Gillett made contact through a conference call facility minutes later their message was words to the effect of "We're restraining you." It was a carbon copy of the Americans' conference call tactics at last week's meeting in the same offices, convened to agree the NESV sale, when they rang to declare three of the directors suspended.
Lawyers were scrambling to ascertain the jurisdiction of the Texas District Court in Dallas, which described the imminent sale to New England Sports Ventures as a "swindle of epic proportions." It is understood that the club's non-executive chairman, Martin Broughton, who brought about the proposed NESV sale, must now wait several days to conclude it. He must go back to the High Court and through the Texas legal system to prove the restraining order carries no weight. He is confident that he will succeed again.
Though last night's board meeting at the London office of solicitors Slaughter & May "resolved to complete the sale of the club to NESV" according to a statement issued by Liverpool, the restraining order was enough to "prevent the transaction being complete."
Even if the order cannot be enforced by Hicks and Gillett, the paperwork confirms something that managing director Christian Purslow has been particularly aware of – that the outgoing owners will pursue the remaining three directors for damages, seeking compensation for an under-valuation of the club which has seen them lose £144m. Hicks' and Gillett's High Court defeat yesterday is believed to leave them liable to pay costs of around £500,000, including a portion to NESV.
Henry arrived at the board meeting clutching two briefcases and declaring that he was "pretty confident" as he headed into the meeting. But in less than an hour he was to be confronted by the restraining order.
The suit accuses the English directors' of an "epic swindle" in which they conspired to devise and execute a scheme to sell Liverpool to NESV at a price they know to be well below true market value. It repeated arguments Mr Justice Floyd had utterly dismissed in Court 18 of the High Court seven hours earlier, about how the "defendants" – Broughton, Purslow, commercial director Ian Ayre and finance director Philip Nash – had marginalised Hicks and Gillett from the sales process.
But Hicks also introduced information about two new higher valuations for the club – one of which was touched upon in court; the other not mentioned, which was a bad omission if Hicks considered it significant
One of the bidders was represented by FBR Capital Markets, offering to purchase Liverpool FC for £375m to £400m, the Texas court papers said. A letter from the bidder had informed Hicks that the potential purchaser would not need financing, possessed the funds to close the transaction, and intended to build a new stadium.
Hicks also claimed through the court that he and Gillett had heard about another potential investor that made a similar offer in the £350m to £400m range "that was communicated to Defendant Broughton and another unnamed co-conspirator in late August." (The language becomes more far-fetched as the restraining order advances.) Hicks claims Broughton failed to respond to this buyer.
Liverpool's players will presumably be depressed to awake to the latest developments today, since they were already preparing to usher in the new era yesterday, with Jamie Carragher issuing a typically intelligent and uncompromising response. "We have changed the manager, changed the board and if things don't change now then the players will go, too," he said. "Everything else has changed, it is just the players who have stayed the same."
The High Court may take a dim view, too, given that the ground had been cleared for the board meeting after Mr Justice Floyd's insistence that by 8pm last night Hicks and Gillett must sign documents asserting that the two men they had suspended – Purslow and Ayre – had been reinstated. The court case, brought by RBS, turned on Clauses 1c and 1d in a "corporate governance sideletter" signed with RBS on 15 April this year. This transferred the right to hire and fire directors to Broughton as one of the conditions on which the Americans would get an extension of the £200m loan they took to buy the club.
"The outgoing Americans took a decision to renege on that pledge, knowing it was illegal to do so, but they tried to use the court case to present the notion that Broughton has 'rushed' into a sale of the club while ignoring higher bids," the judge said.
Broughton's written submissions to court showed that he had approached 130 possible buyers, and that the announcement of the sale process on 16 April delivered 27 expressions of interest, with 13 firm ones. He had also called board meetings on 4, 13 and 27 August, then 28 September, to discuss the sale process and had invited the Americans to last Tuesday's fateful meeting at which the NESV deal was accepted.
Liverpool reaction: 'It's a major step forward. Totally over the moon'
Steven Gerrard Liverpool captain
A fantastic result and credit to Christian Purslow and Martin Broughton who have worked so hard.
Jamie Carragher Liverpool defender
A lot of supporters will be delighted with the outcome. I am sure that will give us a feel-good factor.
John W Henry Head of NESV consortium
Well done Martin, Christian and Ian [Ayre]. Well done RBS. Well done supporters.
Rafael Benitez Former Liverpool manager
Today I am so happy for the people of Liverpool. Finally the club can move forward and get stability.
Chris de Burgh Singer
Hicks & Gillett were catastrophic; like unwanted houseguests who outstay their welcome.
David Fairclough Former Liverpool striker
It is good news and Liverpool can look forward. There will be smiles on the faces of the fans.
Totally over the moon. Well done everybody who helped us get here, never underestimate fan power.
Now maybe we can get back to doing things the Liverpool way, behind closed doors, in house.
Diving in at the deep end is no excuse for shirking the style stakes
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