The Liverpool Saga

I chose not to blog about this issue but changed my mind when I realised not only was it an interesting topic from a sporting angle but also, it raises a lot of legal issues that lawyers, especially international lawyers, should take notice of. Also, most importantly, I believe patrons of my blog will find it interesting.

What makes this very interesting is the fact that it involves American owners (Hicks and Gillett) of a British entity (Liverpool) who sought an injunction in a different jurisdiction (Texas) to prevent a sale from taking place between an entity (Liverpool) based in England and an entity (NESV) based in Massachusetts.

Hicks and Gillett purchased Liverpool in 2007. Earlier this year they decided to put Liverpool up for sale and therefore brought in Martin Broughton to chair the board and lead the sale. A sale was necessary because of the debt (GBP237 million) owed to RBS by Liverpool. Hicks and Gillett initially wanted GBP600 million for Liverpool. However, NESV offered GBP300 million. It is estimated that Hicks and Gillett lost about GBP143 million as a result of this transaction.

Besides NESV there was a consortium of Asia investors who put in a bid higher for Liverpool. Realising how murky the situation was going to be coupled with their chances to persuade the board to sell Liverpool to them, they withdrew their bid leaving NESV as the only potential buyer.

It was either NESV or administration i.e. Liverpool would have been placed in administration to in order to pay off the debt owed to RBS. Hicks and Gillett sought an injunction to prevent the sale to NESV from taking place. The injunction also sought damages of over $1 billion.

The High Court in England and Wales struck out the injunction stating that it had no effect in England and Wales and instructed Hicks and Gillett to withdraw their injunction from the court in Texas or be held in contempt of court – clear-cut example of a conflict of laws issue.

What readers should think about is why Hicks and Gillett decided to seek an injunction in Texas as opposed to England and Wales. The only reason why Texas had an interest in the case was because Hicks and Gillett resided there. Should that be enough to issue an injunction to prevent a sale in England and Wales?

I think not and so did the High Court judge who ruled that the injunction had no effect in English courts. Hicks and Gillett may be right about the epic swindle by RBS and Liverpool’s board – why did they not file the injunction in the High Court of England and Wales?

There is a lot to think about regarding this saga but I am particularly glad that Liverpool has a new owner who is more than capable of turning the football club around. Surely not to win the Premier League any time soon. Ha-ha.

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