A New York state judge in a decision late last month strongly sided with a financial firm that alleges the 2010 sale of Liverpool FC was the result of an underhanded deal done secretly and at a bargain basement price.
While New York State Supreme Court Judge Eileen Bransten did not rule in favor on Mill Financial’s lawsuit against Royal Bank of Scotland, which oversaw the disputed sale of Liverpool FC, she repeatedly sided with Mill in her 19-page decision.
“RBS’s breach of the implied [covenant] of good faith and fair dealing also caused Mill Financial to suffer direct damages,” she wrote in an opinion that for the second time rebuffed RBS’s effort to have the lawsuit dismissed.
Mill and RBS were creditors of George Gillett, one of the two financially strapped owners of Liverpool FC in 2010. Along with another bank, the three lenders signed an agreement that promised to keep one another informed of any significant moves.
Mill alleges RBS moved secretly to sell the team to Fenway Sports Group, when Mill itself would have offered more. By accepting an allegedly below-market deal, Mill maintains that its entire loan to Gillett, $70 million, was wiped out.
Gillett and his co-owner Tom Hicks made related arguments in British courts but were turned down.
Bransten’s opinion promised that the disputed sale of Liverpool FC would, barring a settlement, see a courtroom trial.
“The implied covenant of good faith and fair dealing inherent in the tri party agreement imposed a duty on RBS not to intentionally destroy Mill Financial’s security interests … thereby depriving Mill Financial of the right to ‘contemporaneously foreclose against Gillett.’ This court concludes that RBS control of the club’s board of directors and peremptory sale of the club could have had the effect of destroying or injuring the right of Mill Financial.”
Bransten ordered the counsel to appear at a preliminary conference next week.