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FootballLawNewsREVEALED: Hicks and Gillett ‘face uphill struggle’ in any Liverpool compensation claim

REVEALED: Hicks and Gillett ‘face uphill struggle’ in any Liverpool compensation claim

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By Nick Harris

15 October 2010

With the sale of Liverpool to NESV complete and John W Henry, one of the world’s leading sports tycoons, promising ahead of this weekend’s Merseyside derby to restore the club to its former glories, sportingintelligence can reveal Tom Hicks and George Gillett’s legal battle for $1.6bn compensation is likely to be undermined by the fact they were given details in the last 48 hours about how to repay their debt to RBS bank – and made no move to repay the cash.

[Update 10.30pm on 15/10/10: Hicks and Gillett have dropped lawsuit (but not all possibility of legal action) and Hicks speaks out on sale]

This website can reveal that Hicks and Gillett (or rather their representatives) made contact with RBS asking for specific details about how to transfer funds to repay debts of around £200m to RBS, upon the payment of which they could have laid claim to the club again, in theory. Those details were provided, opening a window for Hicks to make a payment, albeit with a proviso from RBS that Hicks should inform the Liverpool board of the source of the funds before making any payment.

No payment was forthcoming. They had a theoretical chance to pay the money, including details of where it should go, but no money was transferred.

The legal battles of the last 24 hours unfolded instead and NESV completed their takeover.

Andrew Nixon, a partner with leading lawyers Thomas Eggar and a contributing columnist to the regular The Sports Lawyer feature on this website, has separately asserted today that Hicks and Gillett will struggle in any compensation battle, a view likely to soothe some concerns that Liverpool will be mired in legal battles with Hicks and Gillett for years to come.

“Whilst the threat of separate proceedings remains an issue that Liverpool Football Club may ultimately have to deal with head on, it seems clear that they will have a strong defence to any claim,” Nixon says. “Hicks and Gillett will inevitably seek to argue that the board, namely Martin Broughton, Christian Purslow and Ian Ayre, sold the football club at an undervalue.

“This argument is unlikely to carry much weight, as it seems clear that the Liverpool board undertook all necessary due diligence in relation to the NESV deal, and followed the correct legal processes in agreeing the final figure. Indeed, Mr Justice Floyd himself endorsed the approach of the board in his judgement on Wednesday.

“Equally, it remains unclear how Hicks and Gillett might seek to quantify damages in the region of £1billion, particularly when it is taken into account that the apparent offer of Mr Lin was only £20m more than the NESV deal.”

RBS have released a statement saying: “RBS is pleased the sale of LFC to NESV has been completed and are confident this will provide the foundation for the Club and its fans to enjoy renewed success on and off the pitch.

“RBS is aware of reports that Mr Hicks and Mr Gillett may intend to pursue further litigation in relation to the sale of Liverpool F.C. The English Courts have described claims made to date as ‘not realistic and abusive’. Any further claims against RBS will be vigorously opposed.”

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