On a day of legal wrangling on both sides of the Atlantic, a British High Court judge granted an injunction against co-owners Tom Hicks and George Gillett Jr., ordering them to withdraw their legal action in a Dallas district court.
The order effectively nullified a temporary restraining order Hicks and Gillett had obtained Wednesday to block the 300 million pound ($476 million) sale of the club to New England Sports Ventures. Hicks and Gillett — who stand to lose more than 140 million pounds if the sale goes through — have the described the attempted sale as an “epic swindle” that undervalues English football’s most successful club.
Judge Christopher Floyd ordered them to withdraw their action by 4 p.m. London time Friday (11 a.m. EDT) or be held in contempt of court.
The case then turned back to the Texas court, where NESV attorneys filed a motion to throw out the restraining order, arguing that the Friday deadline must be met to avoid putting the Liverpool franchise into default with its creditors.
The Texas judge in the case, Jim Jordan, scheduled a hearing for 8 a.m. local time (1200 GMT) Friday to hear the NESV’s motion.
Earlier in London, Floyd harshly criticized the duo for turning to an American court after losing a previous case at the High Court on Wednesday, calling it “unconscionable conduct on the part of Mr. Hicks and Mr. Gillett.” “This case has no real connection to Texas,” Floyd said.
Floyd’s ruling led Liverpool to issue a statement on behalf of chairman Martin Broughton and two English board members saying “we are glad to have taken another important step toward completing the sale process.” While the London court hearing was being held, lawyers for Hicks and Gillett asked the Texas court to hold the three Liverpool board members in contempt for trying to go through with the sale.
Despite the restraining order issued from Texas, the Liverpool board voted Wednesday for the second time to approve the sale to NESV.
“Further showing their unlawful intentions and brazen disregard for their obligations, defendants have undisputedly — and, according to their statements, quite proudly — violated this court’s temporary restraining order,” the motion said.
NESV lawyer David Chivers said the sale would go through once the Texas case is withdrawn.
“We are the owners (of Liverpool),” Chivers told the High Court. “The owners from beyond the grave are seeking to exercise with their dead hand a continuing grip on this company.” Floyd, the British judge, also criticized Hicks and Gillett for not telling the Texas court that the High Court in London had ruled against them earlier Wednesday in their attempts to block the sale.
“It’s a deliberate omission not to mention the fact,” Floyd said.
Richard Snowden, a lawyer representing Royal Bank of Scotland — which controls Liverpool’s debts and has been trying to get the sale approved — told the High Court that the Texas ruling was “inappropriate” and should have no bearing on the case.
“The Texas court seems to have been told remarkably little about the proceedings in this court,” Snowden said.
“This is the most outrageous abuse of process. ... The proceedings in Texas are plainly inappropriate.
“This dispute concerns an English football club and their English companies. It has nothing to do with Texas other than the fact that Messrs. Hicks and Gillett may reside there.” Anthony Grabiner, a lawyer representing the Liverpool board at the London hearing, called the Dallas court case “frankly preposterous.” “It reads like a novel,” he said. “If it wasn’t so serious, it would be a joke. ... It’s a grotesque parody of the truth.” Debts and liabilities resulting from Hicks and Gillett’s leveraged purchase of the club three years ago have grown to around 285 million pounds ($453 million), which is owed to RBS and Wells Fargo by Friday.
Two others bids emerged this week — one from Singapore businessman Peter Lim and another from an American hedge fund Mill Financial. Hicks and Gillett said Wednesday there was also a bid from FBR Capital Markets for between 375 and 400 million pounds ($595 million to $635 million).
Lim said Wednesday he will not proceed with his bid because the board is intent on selling to NESV “at the exclusion of all other parties.” Liverpool faces a Friday deadline to repay its debts to RBS. If Liverpool is put into financial administration, a form of bankruptcy protection, the club would be docked nine points by the Premier League. However, it seems unlikely that RBS would take the club into administration at this point.
Liverpool, an 18-time English league champion, is currently mired in the relegation zone after its worst start to a league season since 1953.
