RBS obtains injunction against Hicks and Gillett
Royal Bank of Scotland has secured an injunction preventing Tom Hicks and George Gillett from removing independent chairman Martin Broughton or any other Liverpool board members ahead of Tuesday's court case.
The outcome of the case between RBS and the two Americans in the High Court is of huge importance to Liverpool as it will establish whether the board can be reconstituted with Broughton, commercial director Ian Ayre and managing director Christian Purslow in place. The three men agreed to sell the club to New England Sports Ventures (NESV) last week, against the wishes of Hicks and Gillett.
If the court rules in favour of the co-owners then the takeover will not go through and the Reds could enter administration and possibly incur a nine-point penalty on Friday, when the deadline expires to repay RBS £237 million.
Tuesday's case is not the declaratory judgement, that Broughton has referred to previously, that the Liverpool board acted validly by approving the £300 million sale of the club to NESV. That case is now expected to take place later in the week.
RBS lent Hicks and Gillett the money to purchase Liverpool in March 2007 and when the two Americans sought a six-month extension on the loan in April 2010, the bank oversaw the reconstitution of the Liverpool board, including bringing in Martin Broughton as independent chairman.
When Broughton sought to complete a takeover deal with Boston Red Sox owners NESV last week, Hicks responded by attempting to remove Ayre and Purslow from the board and replacing them with his son Mack and associate Lori McCutcheon.
RBS is claiming in the High Court that Hicks and Gillett breached their agreement with the bank when attempting to remove Ayre and Purslow from the board, and has won an injunction preventing them from completing a similar move ahead of Tuesday's crucial hearing.
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 [Tuesday].
"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.
"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 BST in Court 18. The case may not be concluded on Tuesday but it is anticipated it will be by the end of the week.
The key issue to be decided is whether Broughton had the authority to agree the sale of the club to NESV against the wishes of Hicks and Gillett, who believe the takeover undervalues Liverpool and stand to lose £144 million if it goes through.
Broughton claims that RBS requested undertakings from Hicks and Gillett in April that only he could make changes to the board. Hicks has denied that any such undertakings are in place and claims the sale is invalid as a result.
The Hicks camp is remaining silent following the latest developments. However, it is understood that the American has no intention of turning up at court and is currently in his home country. A contingent of Liverpool fans are expected to be outside court on Tuesday.
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