SBD/July 26, 2012/Franchises
Judge Rules Lawsuit Against RBS For Role In '10 Sale Of EPL Club Liverpool May Proceed
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A New York state court judge ruled this week a lawsuit against RBS for its role in the sale of EPL club Liverpool in ‘10 may proceed, though she is requiring the damages part of the suit to be re-filed. Mill Financial, a lender to one of the past Liverpool owners, charges that the sale violated the team’s lenders’ agreement because it was shut out of trying to buy the club itself. N.Y. State Supreme Court Judge Eileen Bransten ruled Mill had made enough of a case that RBS breached the lenders’ contract and acted in bad faith for the case to proceed. In ‘10, previous Liverpool co-Owners Tom Hicks and George Gillett alleged the sale to the owners of the Red Sox had been done behind their backs and for a lower price than the club could have fetched. In default on their debt, Hicks and Gillett had essentially handed over control of the team to the lenders to organize a sale, though they still remained owners. Mill, as lender to Gillett, controlled his interest at the time, and sought to either repay the debt or buy the club outright. It alleges that RBS, in violation of a tri-party creditors’ agreement between the Scottish bank, Mill and Wachovia, did not inform Mill it was proceeding with a sale to the Red Sox owners and ignored Mill’s higher offer. Bransten in her ruling wrote that Mill apparently was willing to pay more for the team than the Red Sox group paid. However, she did not allow for Mill to make a claim that its damages should be based on how much money it could have earned had it been allowed to buy Liverpool because that was barred by the tri-party agreement. Bransten said Mill could re-file that aspect of the lawsuit.
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FIRST DECISION AGAINST CLUB: The decision is the first since the controversial sale from Hicks and Gillett not to favor the club or those close to it. A British court right after the sale dismissed the former owners' lawsuit seeking to halt the transaction. The Mill lawsuit has been winding its way through the court since November ‘10. Initially, it was filed against Gillett, but last year Mill added RBS as a defendant. Bransten’s decision is the first in the case. RBS had sought to have the case dismissed. The final outcome will not affect the current ownership of Liverpool, which is not named as a defendant in the lawsuit.