RBS Returns to Court to Prevent Former Liverpool Owners From Filing Suit

Royal Bank of Scotland Group Plc is seeking to permanently block former Liverpool owners Tom Hicks and George Gillett from suing for damages over the 300 million pound ($478.5 million) forced sale of the English football team.

Justice Christopher Floyd, who allowed the sale to proceed in October, will hear the case in London’s High Court between Feb. 9 and 11. His injunction ordered Hicks and Gillett to drop a case in Texas and allowed the sale of the 18-time English champion to the owners of the Boston Red Sox to proceed.

Hicks and Gillett, who described the sale as an “epic swindle,” could sue in the U.S. if RBS fails to win a permanent injunction. New England Sports Ventures bought the club after repaying a 237 million-pound loan Hicks and Gillett had with RBS and Wells Fargo & Co. The ex-owners lost 140 million pounds in the sale and said they were blocked from repaying their debts.

“If Hicks and Gillett are successful it paves the way for them to take further action,” said Ian Lynam, a partner at law firm Charles Russell who specializes in sports. “This outcome won’t mean they’ll be successful in any future damages claim.”

RBS spokesman Michael Strachan, Liverpool spokesman Ian Cotton and Mark Semer, a New York-based spokesman Hicks, all declined to comment.

The sale of the five-time European champion led to lawsuits in the U.S. and the U.K. after three English board members agreed to sell the team against the wishes of Hicks and Gillett. RBS demanded the club, which faced bankruptcy if its debts went unpaid, be put up for sale in April after agreeing to give the former owners a six-month extension to pay their debts.

Supporters

Supporters chanted and cheered outside the High Court and again outside the offices of Liverpool’s London-based law firm Slaughter and May when John Henry’s organization, now referred to as the Fenway Sports Group, was cleared to buy the team.

“This outcome not only devalues the club but it also will result in long-term uncertainty for the fans, players and everyone who loves this sport because all legal recourses will be pursued,” Steve Stodghill, the Texas attorney representing Hicks and Gillett, said in October.

“They are going to have to show documentary proof there was someone out there willing to pay more for the club,” said Danny Davis, a partner at London-based law firm Mishcon de Reya. “Ultimately these guys are annoyed because they weren’t able to flip the business and make a profit.”

Hicks and Gillett completed a 219 million-pound leveraged buyout in 2007. The pair had their own disputes, as well as with then-coach Rafael Benitez, and faced continuous fan protest over rising debts and the failure to build a new stadium.

Struggles

The new ownership has struggled to steady the team, which last season failed to qualify for European soccer’s Champions League for the first time since 2004. On Jan. 8, manager Roy Hodgson was replaced after six months in the job by former player Kenny Dalglish. The team is four points off the relegation places after enduring its worst start since 1953.

In November, Springfield, Virginia-based Mill Financial sued Gillett and 12 of his companies for $117 million over a personal loan he used to invest in Liverpool.

Hicks and Gillett have also sold franchises in other sports. Hicks in August got rid of his stake in a Major League Baseball team, the Texas Rangers, after it filed for bankruptcy. In June 2009, Gillett agreed to sell his 80.1 percent stake in the Montreal Canadiens ice hockey team.

To contact the reporter on this story: Tariq Panja in London at at tpanja@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at at celser@bloomberg.net

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