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Volume 21 No. 1
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Court revives case tied to the sale of Liverpool club

It’s been nearly seven years since the controversial sale of Liverpool Football Club, and it appeared last year that the final legal challenge had been extinguished.

But late last month, a New York state appeals court revived a lawsuit against LFC adviser and lender Royal Bank of Scotland for its role in the months leading up to the sale.

The case now returns to New York State Supreme Court, where a judge will look at whether RBS’s action in shielding a fellow lender from critical information resulted in an artificially low price of the team.

Mill Financial, a lender to previous owner George Gillett, has contended it could have bought LFC itself, or refinanced the RBS debt, had it known the Scottish bank had taken actions to begin selling the team. Under a creditor agreement between the lenders, RBS was obligated to do so.

“RBS fails to address Mill’s specific argument that the effect … caused a diminution in value of the club,” the New York appeals court wrote.

The court also notes that RBS did not address Mill’s argument that it could have refinanced the debt that the Scottish bank cited in forcing a sale of the team.

The decision does not imperil Fenway Sports Group’s ownership of the club, but once again the tumultuous process that led to the sale will get a public hearing.

In 2010, the board of directors pulled decision-making in the debt-laden team away from owners Gillett and Tom Hicks, leading to the Fenway sale. Mill has contended that RBS orchestrated that move to ensure it got paid back on its loan, and left Mill out in the cold. With interest, Mill is left owed more than $100 million.