Reds’ fate set to be decided

LIVERPOOL’s immediate future is set to be decided by Mr Justice Floyd in Britain’s High Court today after a day of twists and turns both inside and outside the courtroom.

Legal counsel spent the best part of five hours arguing the rights and wrongs of decisions made by chairman Martin Broughton and owners Tom Hicks and George Gillett.

During that time a new offer came in from Singapore businessman Peter Lim, while it emerged in court proceedings that Mill Financial, the hedge fund which now controls Gillett’s shares after he defaulted on a loan, are also interested in bidding for the club.

It was thought these developments would delay matters beyond Friday’s repayment deadline for the loan from Royal Bank of Scotland (RBS), Liverpool’s major creditors who launched the action against the owners.

However, the court will reconvene today when Mr Justice Floyd is likely to give his judgement.

If he rules in favour of RBS, who were seeking a ruling that Hicks and Gillett were in breach of contract and were therefore unable to block any sale, it seems likely a £300 million (€340m) deal to sell to New England Sports Ventures (NESV) will go through.

Any other decision or further delay will give renewed hope to Hicks, Lim and Mill Financial and could set back the whole process by a week or more.

However, RBS would still have the option of putting Kop Holdings, Liverpool’s parent company, into administration as the owners are technically already in breach of their loan agreement. The bank’s lawyers accused Hicks and Gillett of changing the running of the club to “frustrate” its sale ahead of Friday’s deadline.

Richard Snowden QC, representing RBS, said the American owners now admitted “a calculated breach of contract” by seeking to change the constitution of the football companies controlling the club without the consent of the bank.

Such action was contrary to undertakings agreed with RBS when the club was put up for sale in April which installed managing director Christian Purslow and commercial director Ian Ayre on to the board.

That stopped the Americans, now in a minority, blocking any sale and also gave Broughton sole power for changing the make-up of the board.

Snowden said Hicks’ actions last week were “to frustrate the sale necessary to repay the bank £200m (€227m) by this Friday”.

But Paul Girolami QC, representing the American owners, said his clients “were not trying to throw a spanner in the works” of the proposed sale deal and argued there had been other offers, potentially better than the one wrongly approved by the board.

RBS secured an injunction on Friday to prevent the Americans sacking independent chairman Broughton or any other board members after Hicks’ attempt to replace Purslow and Ayre with his son Mack and business association Lori McCutcheon when a meeting was convened to discuss NESV’s bid.

The judge was asked to impose injunctions on the owners requiring them to restore the original constitutions of the companies and managing directors.

This would remove the final stumbling block to a NESV takeover, which would see RBS recoup its original £237m (€269m) loan but Hicks and Gillett lose £144m (€163m). Mr Snowden said evidence filed to the court showed “breathtaking arrogance on the part of Mr Hicks and Mr Gillett”.

Mr Girolami, opposing an immediate injunction, said all the issues involved needed more time to determine and “should not be rushed into”.

“What has happened is that the English directors have gone forward with the NESV bid without properly considering alternatives when those alternatives at least appear to give better prospects,” he said.

Lord Grabiner QC, representing the Liverpool football club companies, said his clients were supporting the RBS application and wanted to see the issues resolved by the end of this week. He told the judge: “No court stops a board from acting as it sees fit in the best interests of the company.”

Lurking in the background is the new bid from Lim, whose original offer was overlooked in favour of NESV’s.

The billionaire is offering £320m (€363m) to clear the acquisition debt, the club’s existing debt and outstanding bank fees and also provide £40m for squad strengthening in January – all with cash from his own personal wealth.

In effect it amounts to £20m more than the sale price NESV agreed last week, as they have not made any pronouncement on transfer funds.

Tellingly, it does not offer any more money to Hicks and Gillett, who have been holding out for a better price.