“Lord Grabiner QC and Jamie Goldsmith acted for the Liverpool Football Club (Kop Football Ltd and Kop Football Holdings Ltd, “the Companies”) in hotly contested claims between RBS, the Companies, and the owners, Messrs Hicks and Gillett. RBS financed the purchase of Liverpool Football Club by Hicks and Gillett in 2007. After granting numerous extensions, RBS insisted as a pre-condition to a further extension of the major part of the facility (£200m) that the Owners agree to sell their shares in the Companies and, in the meantime, relinquish their control of the management of the Companies and bring in an independent chairman (as well as other independent directors) to run the sale process.
The Owners duly entered into agreements with RBS and the Companies, in particular, to reconstitute the boards of the Companies accordingly and to undertake not to make any changes to the revised corporate governance structure, which was then provided for in the Companies’ Articles. As a result, the facility was extended to 15 October 2010. By the beginning of October, a lengthy and thorough sale process with the assistance of professional advisers, in particular Barclays Capital, only produced two firms offers that were capable of completion in advance of the repayment date. If neither were accepted, RBS would be entitled to put Liverpool into administration with potentially catastrophic consequences on the value of the business and the club already in the relegation zone of the Premier League.
On 3 October, the Chairman, Mr Broughton, gave notice of board meetings to consider the two offers. At this point, the Owners took drastic action. In clear breach of the corporate governance agreements, they secretly convened and purported to pass written shareholder resolutions removing the independent directors (other than the Chairman) from office and replacing them with two of their representatives (including Mr Hicks’ son). In so doing, the Owners hoped to regain the control of the Companies and the sale process which they had voluntarily relinquished. The independent majority of the board refused to recognise the validity of the purported resolutions and resolved in a series of meetings to sell Liverpool Football Club to the best available bidder, NESV. Legal claims followed from each of the Owners, the Companies and RBS. The latter sought a mandatory injunction to reverse any purported reconstitution of the boards of the Companies. For their part, Messrs Hicks and Gillett sought to restrain the sale of the club to NESV.
The legal issues involved points of company law as well as the availability of mandatory injunctive relief. After a highly eventful and fast moving week, Lord Grabiner QC and Jamie Goldsmith successfully supported RBS’ application for a mandatory injunction, which was granted on the basis that there was no arguable defence to RBS’s claim. They also successfully resisted the Owners’ application for a negative injunction, which was refused. The result is that the boards of the Companies have been reconstituted and the sale process can take its proper course. Permission to appeal was refused by the Judge, Mr Justice Floyd.
Thereafter, instead of applying to the English Court of Appeal for permission, the Owners launched their own claim against the independent directors, as well as NESV and RBS, in Dallas, Texas for the same declaratory relief as in issue in England as well as a damages claim. In a highly charged petition, the Owners complained of an “epic swindle” and “grand conspiracy” by the parties concerned. At the same time, they applied without notice to the Dallas District Court for the same interlocutory relief which had been refused by Floyd J in the English Court earlier that day (without apparently mentioning this fact to the Dallas Court), as well as an injunction to prevent RBS from enforcing any of its security rights under the loan facility. The Dallas District Court granted a temporary restraining order (“TRO”). The effect of the TRO was to frustrate the orders granted by the English Court and to prevent any sale of LFC going ahead.
In the circumstances, RBS, the Companies, the independent directors and NESV applied to the English Court the next morning for an anti-suit injunction, as well as other relief. The matter was again heard by Floyd J. After argument from the parties other than the Owners (whose legal representatives did not attend on the basis that they were without instructions), the Judge again ruled against the Owners. He held that there was no real connection with Texas, that the Texan proceedings were an attempt to deprive RBS of the fruits of the success in England and, in all the circumstances, amounted to unconscionable conduct on the part of the Owners. Accordingly, he granted an anti-suit injunction preventing the Owners from continuing with the Texan proceedings (or any other proceedings relating to the same subject matter other than in England or the EU) and ordering the Owners to take steps to have the TRO removed forthwith.
The Owners complied with that order. A sale of LFC to NESV has now completed.”
Lord Grabiner QC and James Goldsmith were instructed by Slaughter & May on behalf of Liverpool Football Club