Nov. 19 (Bloomberg) -- Former Liverpool Football Club co-owner George Gillett was sued for $117 million over a personal loan he used to invest in the Premier League soccer club.
Mill Financial, based in Springfield, Virginia, alleged that Gillett and 12 of his companies are liable under guarantees made when the firm extended a $70 million term loan to them in January 2008, according to a complaint filed yesterday in New York state court in Manhattan. The rate of interest on the loan was 19 percent, according to the court filing.
Tom Hicks, former owner of the Texas Rangers baseball team, and Gillett failed to prevent the 300 million pound ($480 million) forced sale of Liverpool to Boston Red Sox owner John W. Henry’s New England Sports Ventures. The sale led to Hicks and Gillett losing 140 million pounds, Liverpool Chairman Martin Broughton said.
The New York lawsuit “arises from the defendants’ failure to honor their obligations pursuant to the unlimited, unconditional, and continuing personal guaranties which they executed in favor of Mill Financial,” according to the court filing.
Gillett has declined to comment publicly on his relationship with Mill Financial. He didn’t respond to a voicemail seeking comment.
In its complaint, Mill said the loan agreement was “amended several times” and the final date for full repayment was Aug. 13. By July 15, the time of the last extension, Gillett owed $89.8 million. Extra fees and legal expenses mean the amount now owed is $117.2 million, Mill said.
In his guaranties, Gillett “waived every defense, cause of action, counterclaim or setoff which the guarantor may now have or hereafter have to any action by (plaintiff) in enforcing this guaranty except the defense of discharge by payment in full,” Mill said in court papers.
While Gillett repaid $431,081 on Sept. 9, “this amount was not sufficient to cure the default,” according to the filing.
Gillett’s ownership of Liverpool has led to several lawsuits. He and Hicks lost two court challenges in London’s High Court prior to the Oct. 15 sale to Henry’s group. The sale came after the former owners tried to stop the deal by gaining a temporary restraining order from a Dallas court.
Mill had been in talks with Liverpool’s board and its bankers, Royal Bank of Scotland Plc and Wells Fargo & Co., about buying the 18-time English soccer champion. The sale was forced after Hicks and Gillett failed to pay back 237 million pounds to the banks when the debt matured.
Hicks has claimed the sale was an “epic swindle.”
The case is Mill Financial LLC v. Gillett, 10-652055, New York State Supreme Court in Manhattan (New York County).
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