RBS make Liverpool move ahead of court date

The Royal Bank of Scotland has obtained an injunction preventing Liverpool owners Tom Hicks and George Gillett from sacking independent chairman Martin Broughton or any other board members ahead of tomorrow's court case.

RBS is the club's main creditor, having lent Americans Hicks and Gillett the money to buy the club in March 2007, and is claiming in the High Court that the pair breached their agreement by trying to replace managing director Christian Purslow and commercial director Ian Ayres on the board last week.

The outcome of the case should decide Liverpool's immediate future, with the club's board having agreed to a £300million offer from New England Sports Venture, against the wishes of Hicks and Gillett.

RBS said in a statement: "RBS in its capacity as lender to the Kop group of companies received the benefit of various contractual undertakings from Mr Hicks and Mr Gillett in relation to the corporate governance arrangements that Mr Hicks and Mr Gillett agreed would apply to the Kop group of companies with effect from April 2010.

"Those undertakings provided for the appointment of Mr Broughton as chairman of the board and the appointment of the chief executive and commercial director of LFC to the Kop boards.

"As is well known Mr Hicks and Mr Gillett purported to make changes to those corporate governance arrangements on 4 October. This was in breach of those contractual undertakings.

"In light of that purported breach of contract RBS sought and obtained on Friday 8 October 2010 an interim injunction against Mr Hicks and Mr Gillett until a further hearing scheduled for tomorrow.

"Among other things, that interim injunction prevents Mr Hicks or Mr Gillett taking any steps to remove or replace Mr Broughton from his position as chairman of the board of the Kop companies or from taking any other steps to appoint or remove any directors from the board of the Kop companies."

It also emerged today that Liverpool's owners have been technically in default of their refinancing agreement for some time - despite the repayment deadline of Friday.

RBS have chosen, however, not to enforce that default position which would have led to Kop Holdings going into administration and risk Liverpool incurring a nine-point deduction from the Premier League.

That could still happen if Hicks and Gillett have not repaid their £280m debts by Friday's deadline.

The RBS statement added: "The proceedings tomorrow represent the continuation of Friday's proceedings and relates to breach of contract only. These proceedings do not represent steps by RBS to enforce its security or to appoint an administrator.

"We are unable to provide any visibility on timing for resolution of these proceedings at this stage."

Royal Bank of Scotland PLC v Hicks & others is among a number of applications to be heard by Mr Justice Floyd at 1030 in Court 18.

That signals the start of the process which may not be concluded tomorrow but should be by the end of the week.

The dispute to be settled revolves around whether chairman Broughton had the authority to sell the club against the wishes of Hicks and Gillett.

Broughton claims when the owners decided to put the club up for sale in April, RBS requested undertakings from them that only he, as independent chairman, could make changes to the club's board.

However, minutes before a meeting last week to discuss the bid by NESV, which will clear all debt but leave the owners with losses of £144million, Hicks tried to sack Purslow and Ayre and install his son, Mack, and Lori McCutcheon, who works for Hicks Holdings.

Broughton rejected the proposal and continued with the meeting, with the England-based board members coming down in favour of the NESV bid.

Hicks, however, has denied there are such undertakings in place, and insists Broughton's actions are illegal and therefore the sale is invalid.

As the issue of who has the necessary authority to agree a sale forms the crux of the legal argument, proof of the existence or not of those undertakings is likely to be pivotal.

Last week Broughton said Hicks and Gillett had "flagrantly abused" their undertakings to the bank.

"As part of my appointment, they gave specific undertakings to the Royal Bank of Scotland that said Martin Broughton was the only person authorised to make any board changes," he said.

"They basically flagrantly abused those two undertakings to RBS and removed Christian and Ian from the board and sent us details just before the board meeting saying they had been removed and appointing two others.

"We took legal advice and I determined that the action was invalid."

Broughton's argument, and that of the rest of the England-based members of the board, is that they have acted in the best interests of the club in agreeing a deal which relieves the huge burden of debt on Liverpool - who were responsible for paying £40m a year in interest.

The NESV offer does not have any provision to pay off the existing owners, who stand to lose £144m - which is why they are so vehemently contesting last week's decision.

His New York-based spokesman Mark Semer, in response to Broughton's claim about the RBS undertakings, last week told Bloomberg News: "There were no such undertakings given to Broughton. The board has been legally reconstituted, and the new board does not approve of this proposed transaction."

News
people
News
A survey carried out by Sainsbury's Finance found 20% of new university students have never washed their own clothes, while 14% cannot even boil an egg
science...and the results are not as pointless as that sounds
News
i100
News
politicsIs David Cameron trying to prove he's down with the kids?
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea