A few months ago I posted on the legal intrigues surrounding the sale of Liverpool F.C.
I received a bunch of positive feedback and a significant amount interest on that topic. As you may recall, I also promised to update readers on the progress of the Hicks and Gillett lawsuit in the U.S. So, with that segue, here's what has happened…..
When we last left our tale, Hicks and Gillett had pledged to pursue their damages lawsuit in the US against the Royal Bank of Scotland, which had been quantified in the range of $1.6 billion over what they called an "epic swindle" - their being blocked by the High Court in enjoining the sale of Liverpool to NESV (New England Sports Ventures), now called Fenway Sports Group.
In late February, Hicks and Gillett applied to the High Court (the Honorable Mr. Justice Floyd - who had granted the anti suit injunction) to lift the anti-suit injunction which had been put in place, "on the basis of what appeared to me [Mr. Justice Floyd] to be the unconscionable conduct of the former owners in seeking to undermine the English proceedings."
To summarize the scoreline, Hicks and Gillett were drubbed.
Mr. Justice Floyd ruled that Hicks and Gillett could not pursue their lawsuit in the US (where obviously damages can be more punitive) without the express permission of the High Court in England; he also ruled that NESV, Sir Martin Broughton (former Liverpool chairman) and the Royal Bank of Scotland could pursue claims against Hicks personally….. But, I have jumped into the action a bit in medias res as they say, so, let me back up a tad…
Before the sale of Liverpool to NESV, the club itself had loans in excess of 235 million pounds to RBS and Wells Fargo and, it was commented on that the sale itself of the club was occasioned by the indebtedness. Accordingly, Broughton and RBS and NESV would clearly welcome the opportunity to pursue a claim against Hicks for his conduct while still owner.
So, when Hicks and Gillett went before the Court to lift the anti-suit injunction they also sought a "strike out or stay" application in respect of claims by Broughton against Hicks and Gillett. This claim was dismissed, paving the way for a claim against Hicks.
The Court ruled, " the reality of the situation is that the former owners have already started 2 sets of proceedings and openly asserted their intention to start more. They will undoubtedly start more proceedings if allowed to do so. There is a real threat that those proceedings will be in the U.S. I still find it difficult to imagine what possible real connection such a claim would have with any jurisdiction in the U.S. The dispute concerns an English asset, duties owned by English directors under English law to English companies and corporate governance arrangements governed by English law. I think the time has come when they need to state their case or accept that they do not have one."
….. Stay tuned for the current owner's next move……
Now, here’s another related story which touches on sport, law, and corporate governance.
As you may also recall from my prior Liverpool blog, the issue of foreign ownership of English football clubs is not every Englishman's cup of tea. And, as matters stand, 10 teams now have foreign ownership.
So, with that in mind, last week Stan Kroenke, an American businessman, increased his shareholdings in Arsenal F.C. (the Gunners to fans) to 62% and made an offer for the balance of the club. The club itself, an English sporting totem and valued in excess of 700 million pounds, is currently chasing the Premiership title (and Manchester United).
Kroenke, whose estimated worth is 1.7 billion pounds, also owns the NBA's Denver Nuggets, the NFL's St. Louis Rams, the NHL's Colorado Avalanche and MLS' Colorado Rapids. His wife's family is related to the Wal Mart empire and "Silent Sam" first became involved with Arsenal in 2007.
But here is where the legal fight may be on. The remaining 27% of Arsenal's shares are held by Uzbeki billionaire Alisher Usmanov who is apparently incandescent about Kroenke's latest corporate move….. Your move Mr. Usmanov…. Stay tuned."
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