RBS takes out injunction to keep Liverpool board in place

THE Royal Bank of Scotland (RBS) 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 today’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 £300 million (€343.3m) 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.

“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.’’

It also emerged yesterday 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 (€320m) debts by Friday’s deadline.

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

That signals the start of the process which may not be concluded today 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 £144m (€165m), 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.

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.

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