Liverpool board has ‘strong court case’
British lawyers have indicated that Liverpoo owners Tom Hicks and George Gillett face a difficult task convincing a High Court judge that the sale of the club to New England Sports Ventures (NESV) is illegal, a move which they will attempt in order to prolong their unpopular tenure on Merseyside.
Lawyers for the English contingent of the Liverpool board, who are awaiting the 24-hour's notice they will receive of the High Court hearing which will rule on the legality of the sale of the club to NESV, do seem to have a strong case.
Legal opinion on the sale — which Hicks and Gillett insist has been rendered invalid because they had suspended two of the directors who voted in the 3-2 decision — is that the Americans have handed non-executive chairman Martin Broughton a huge courtroom asset by signing off to him the right to hire and fire directors.
“If that undertaking is in place, signed and sealed, [he] has a very solid case to seek a declaration that the board are entitled to sell the club,” Andrew Nixon, a partner for Thomas Eggar said yesterday. “If they have broken an undertaking that is a factual issue.”
The articles of association, in which Broughton's right to hire and fire directors and the current owners' undertaking not to take any action to frustrate a sale is enshrined, are critical to the case, Mr Nixon added.
“If they show that [Broughton] has powers of process in both the sale and appointment of directors, it is going to be very, very hard for Hicks and Gillett to get around that.”
Hicks and Gillett's case will centre on whether the £300m sale to NESV, who are today expected to be cleared by the Premier League as fit and proper owners, represents an undervaluation of the club. Under the 2007 Companies Act, it is the fiduciary duty of any director to secure the best value for a company.
“If they can give proper evidence that the £600m price they are talking about is realistic, they have a case,” Mr Nixon added.
“If they can't prove there could be a better sale, they are going to have a very, very difficult job.”
Meanwhile, Liverpool would be at risk of a nine-point deduction if the owners' holding company is put into administration, it emerged last night.
The Royal Bank of Scotland could put Kop Holdings, the company owned by Hicks and Gillett, into administration if the Americans continue to block the takeover and have not paid off their £280million debt to the bank by October 15.
Under Premier League rules, the fact that the holding company is solely concerned with the ownership of Liverpool and football-related matters could trigger the nine-point penalty.
An insider said: “It is not completely clear whether the nine-point penalty would come into play but it would be a risk.”