At 8:00pm tonight John W Henry walked past reporters assembled outside the offices of Liverpool FC’s lawyers
and said he was confident the sale of LFC to his NESV group would soon be done.
As time went on it seemed odd that what was surely a formality was now taking so long. Two hours later a statement had been issued by Hicks, or specifically by “The owners of Liverpool Football Club”, stating that a temporary restraining order (similar to a UK injunction) had been issued preventing the sale of the club from going through.
The judgement states that a hearing will now take place on October 25th. Full statement follows:
The owners of Liverpool Football Club today reported that a Texas State District Court has granted a temporary restraining order (TRO) enjoining the Board of Liverpool Football Club (LFC) from executing a sale of the Club to New England Sports Ventures (NESV). The court set a hearing date of October 25, 2010.
The TRO request, signed by Judge Jim Jordan of the 160th District Court in Dallas, was part of a lawsuit filed today by the owners of LFC against Royal Bank of Scotland (RBS), Martin Broughton, Christian Purslow, Ian Ayre, NESV and Philip Nash. The lawsuit also seeks temporary and permanent injunctions, and damages totaling approximately $1.6 billion (over £1 billion).
The suit lays out the defendants’ “epic swindle” in which they conspired to devise and execute a scheme to sell LFC to NESV at a price they know to be hundreds of millions of dollars below true market value (and well below Forbes magazine’s recent independent $822 million valuation of the club) – and below multiple expressions of interest and offers to buy either the club in its entirety or make minority investments (including Meriton and Mill Financial). It describes how the defendants excluded the owners from meetings, discussions and communications regarding the potential sale to NESV and interfered with efforts by the owners to obtain financing for Liverpool FC.
The Club’s owners are represented by attorneys from the international law firm of Fish & Richardson.
The following are some of the key points in the complaint, which details the roles of RBS and the other defendants, and also describes previously undisclosed offers to purchase LFC:
“The Director Defendants were acting merely as pawns of RBS, wholly abdicating the fiduciary responsibilities that they owed in the sale.”
“RBS has been complicit in this scheme with the Director Defendants. For example, in letters from RBS to potential investors obtained just within the past few days, RBS has informed investors that it will approve of a deal only if there is “no economic return to equity” for Messrs. Hicks and Gillett. In furtherance of this grand conspiracy, on information and belief, RBS has improperly used its influence as the club’s creditor and as a worldwide banking leader to prevent any transaction that would permit Messrs. Hicks and Gillett to recover any of their initial investment in the club, much less share in the substantial appreciation in the value of Liverpool FC that their investments have created.”
“On or about October 4, 2010, Mr. Hicks received a letter of interest from a third potential purchaser represented by FBR Capital Markets (“FBR”), offering to purchase Liverpool FC for £375 to £400 million ($595 to $635 million). The letter informed Mr. Hicks that the potential purchaser would not need financing, possessed the funds to close the transaction, and intended to build a new stadium for Liverpool FC.”
“Additionally, the Plaintiffs learned just days ago about another potential investor that made a similar offer in the £350 to £400 million range that was communicated to Defendant Broughton and another unnamed co-conspirator in late August. According to this investor, Mr. Broughton never responded to the offer. Moreover, when the purported sale to NESV was announced, this investor again contacted Mr. Broughton and informed him that the offer, which significantly exceeded the NESV offer, was still on the table. Again, Mr. Broughton brushed this offer aside without further discussion.”
Obviously there’s a lot in it, and it remains to be seen what the legal position now is. LFC is a UK company, as are its two immediate parent companies, but higher up the chain the companies are not UK-based. NESV is also not UK-based.
Whether or not the Texan court has jurisdiction will no doubt be the subject of much legal wrangling – and in turn more delay to the process.
11 thoughts on “Hicks uses Texas court in attempt to block LFC sale”
This a complete soap opera! The continuing audacity of Hicks just staggers me. Surely this injunction can’t overule the High Court of London?
I am absolutely gobsmacked. The unparalleled stubborness of Tom Hicks has now gone to a level that Is absolutely incredible – even by his standards.
The club must not give one inch or back down one millimetre and should match Hicks determination all the way to the bitter end. Because this is just bullying and has gone too far now.
I cannot see how this will fail in stalling the sale, because why would they try this in the first place?
This has now reached a level that is absolutely unimaginable, what would Bill Shankly be thinking right now?
The message behind this injunction is quite disturbing.
NESV are an American company and the injunction involves them, so I don’t think it should be dismissed out of hand.
My gut instinct is that this is the last desperate act of a desparate dying man. The sale will be announced in the next hour. This injunction means jack s**t.
Our next summer transfer budget should be based on countersuing Hicks for whatever he’s got left. Could probably build a half-decent team with that.
Counter sue for 3 billion for being tw*ts
An interesting email from a law student. “The Texas judge who issued the injunction has not made an decision on the merits of the case. The injunction just halts everything until there is a hearing. The grounds for granting an emergency TRO are that the actions will create irreparable harm that cannot be adequately compensated for through monetary damages. I suspect that once Judge Jordan actually has a hearing on the issue, he will dismiss it and remove the injunction. The Texas courts probably do have jurisdiction, but they will be hesitant to take it when it will put them in conflict with English courts that are better able to adjudicate the issue. Hopefully, this has only temporarily delayed the sale and Liverpool will avoid administration, but H&G have probably bought themselves a couple more days.”
The dangerous allegation here is that there were better offers on the table. Hopefully Broughton can explain satisfactorily why NESV’s offer was preferred – it may be that the other offers did not meet some term of the “auction” (eg evidence of funds or identity of backers etc).
Because we all have to understand that the three “English directors” and RBS itself had a duty to get the best price, they did not (legally at least) have a duty to get the best owners for the Club’s future.
There is also an allegation by Hicks reported that RBS said that the Club would be sold so as not to realise a profit on the investment of H&G – this is frankly incredible, I can’t imagine a creditor bank would be so foolish as to say this – if they did however this would be a serious issue. I think it more likely that any such statement was that the Bank would force through a sale “whether or not” there was a profit left for the equity (ie H&G, or H & Mills as it probably is in reality).
One thing that is not clear from reports – if the board change by Hicks was effective albeit in breach of undertaking such that the board needed to be reconstituted then arguably the “binding” agreement actually signed with NESV was not properly authorised….now although since it was (presumably) signed by at least one director NESV can probably rely on that apparent authority to enforce it – but possibly leaving Broughton in the firing line personally.
If the NESV sale is not binding however the board of Kop Holdings will I think have to take seriously the other apparently higher offers unless they fail to meet some agreed condition of bid (which they may well do, witness Kenny Huang and Yahya whatever etc).
A lesser figure than Broughton may well have flinched at the potential personal liabilities here if the legal analysis goes against him – he has been brave, it seems to me.
Not clear to me how a Texas court has jurisdiction, if Kop Holdings is an English company then whether the sale was constitutional is an English law question. I would be surprised if the RBS loan were governed by any law other than English. NESV are not presumably (from the name at least) Texan… with respect to lfc malta I can’t see it; NESV were innocent buyers, if there is a sale at undervalue Broughton and RBS have the problem.
But it is a temporary order given without hearing argument from RBS’ lawyers, and it is noticeable that the order has “solely” inserted in hand after “Based on…” in every paragraph, underlining the fact theat only one side has been heard.
But the case of H&G vs RBS and Broughton is going to be saga even if the sale gets closed soon.
Judges in State courts in Texas are elected, not appointed. This means political contributions make the difference in judicial candidates winning their elections and sitting on the bench; often deciding cases involving the very people and companies that made contributions to their campaign. It doesn’t take a rocket scientist to figure out that a state court in texas is about the only place consideration of G&H’s position would gain merit. I agree with the other comments, this will not change the ultimate outcome but it will cause delay and allow G&H’s to buy time and conspire to come up with more dreadful actions. I can’t write what I truly feel about these losers.
Been looking at the petition they used to get the Texas order, from which we can see the ownership structure. The only connection with Texas is that the top level holding company, although not even incorporated in Texas but Delaware, does have its principal place of business in Texas. Interestingly, seemingly to obtain Texas jurisdiction, the petition claims that in the cases of Broughton, Purslow, Ayre, NESV and Nash the suit “arises out of” their “business in Texas” – this seems unlikely and merely a device to get the court to accept jurisdiction.
Later the pertition claims Texan jurisdiction because of the Defendants’ (ie RBS, Broughton et al) “continuous and systematic contacts with Texas” – again this seems far-fetched, I doubt any of them except perhaps RBS have anything to do with Texas.
Then it claims that the tort (ie the wrongdoing, the “epic swindle”) occurred in Texas; given that the ultimate Delaware owning company has its principal place of business in Texas and therefore could (legally) be said to have suffered the damage there, this is the only basis I can see where they may have a point, albeit .
But – the English High Court has already taken jurisdiction, H&G have accepted that by being represented there, and the matter can clearly most conveniently be heard there. US courts are traditionally not shy to take jurisdiction on the flimsiest of grounds, but they really should stand aside here. Maybe an anti-suit injunction will be obtained from the English courts directed at H&G…
I don’t believe the audacity of that Hick’s he is living up to every world that RBS’s barristers said he was.
How the can a little back street court possibly over rule the highest court in the UK, why doesn’t the High Court just put the Texan court in contempt of court along with H&G and issue a warrent for their arrest?
Some people have no class then there is H&G there are no words to describe how classless these carpet baggers are.
The point is though they lost the case yesterday as they were in fact in breach of contract, and it was made perfectly clear to the pair that their claims were not based on fact.
Why would a Texan court now decide that a fair independant and impartial high court judge was in fact guilty of incompetance or was infact biased.
This doesn’t look very good on H&G and Iam sure the Texan court will spank him, and apologise to the High Court for the rude little man that Hicks is.
I don’t think they will or would be so disrespctfull to the High Court in London and try to over rule it’s judgement.
And anyway how the hell does a court in the USA have any jurisdiction over anything that happens in the UK.
LFC is registered in the UKand Kop Holdings is registered in the Caymen islands (a uk colony), and I think as a company it is registered in the UK also.
It is clear by now that contrary to expectations, there are actually several parties interested in taking over the club……Kenny Huang, Peter Lim, Red Sox and possibly Kirdi Yahya, a few hedge funds/private equity funds, etc…..
The first two tried their luck using different approaches. Now we understand why Kenny Huang chose to go public over their interest/bid and withdrew his offer subsequently when the board withold his offer to induce others (esp Red Sox) to make a bid. After his offer was withdrawn, the club was afraid that there might not be an offer and Peter Lim was then “given the impression” that he was “the preferred bidder”. He genuinely thought so and placed a bid. This forced Red Sox (the board and RBS’s first choice), to come up with a “similiar and equally attractive” offer themselves. Red Sox was keen all along but wanted to wait till near the deadline of Oct 15 before bidding.
Other interested parties know they are not favoured, so did not bother to put in a bid or if Tom Hick’s claim is true, their interest are totally ignored. This explains why there is apparent lack of interest in the club among the potential “sugar daddies”, big cash investment required notwithstanding.
Now we know why the “auction” was not open and everything was kept private and not revealed to the public. The “dual role” of Martin Broughton is also clear now.
As to why RBS and the board prefer Red Sox to other parties (including some potential sugar daddies), I think it is due to the apparent track record in baseball. Whether or not, they can translate their success in basement to the EPL remains to be seen. I have my doubts though. Afterall, the Americans are not even football fans and while basement is all about statistics, football definitely is NOT or else Rafa (master in match statistics) would have won the league title for us….
Being based in Singapore, I was yearning for Peter Lim to win it though objectively speaking. the CIC-backed Kenny Huang consortium is best option given the deepest pockets they have.
As a fan, I only hope the board have made the right choice. It is now time to turn attention to what is happening on the pitch!
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