In a dramatic twist late last night, a state court in Texas granted the American owners of debt-ridden Liverpool Football Club, Tom Hicks and George Gillett, a temporary restraining order (TRO) to stop the £300m sale of the club to New England Sports Ventures (NESV), the owners of Boston Red Sox.
The TRO request, signed by Judge Jim Jordan of the 160th District Court in Dallas, was part of a lawsuit filed by Hicks and Gillett against Royal Bank of Scotland (RBS), NESV, Liverpool chairman Martin Broughton, managing director Christian Purslow, commercial director Ian Ayre, and financial director Philip Nash.
Many furious Liverpool fans have questioned the authority of an American court to block the sale. The fans fail to realise, however, that RBS, Broughton (in his role as chairman of British Airways), and NESV all have significant connections with Texas, which allows the state court to exercise personal jurisdiction over them. Any violation of the order could lead to criminal charges of contempt.
Hicks and Gillett have branded the sale of the club to NESV an "epic swindle" and say the price negotiated by Broughton is "hundreds of millions of dollars below the club's true market value".
As well as the TRO request, the duo's lawsuit seeks "temporary and permanent injunctions" against the sale of the club and damages from the defendants totalling approximately $1.6 billion (over £1 billion).
Response to the TRO
Broughton, Purslow, Ayre, and Nash all expressed their regret that the court granted the TRO. They issued a joint statement at around 11.30pm last night stating that they had "resolved to complete the sale of Liverpool FC to New England Sports Ventures".
They also said that they consider the restraining order to be "unwarranted and damaging" and will "move as swiftly as possible to seek to have it removed".
A court hearing on the merits of the claim will take place on 25 October 2010.
Earlier in the day, RBS, which controls the majority of the club's £247m debt, won a high court case against Hicks and Gillett in London to prevent them sacking Broughton, Purslow, and Ayre.
High Court Justice Floyd ruled the pair had been guilty of "the clearest possible breach" of a refinancing arrangement agreed with RBS in April and said it would be "entirely wrong" to allow them to block the sale of the club.
Responding to the verdict, a jubilant Martin Broughton promised the club's fans "a bright future".
This now appears to be in jeopardy, however, what with a drawn out transatlantic court battle and administration lying await -- not to mention a possible nine-point Premier League penalty and relegation dogfight looming.
- Texas State District Court Temporary Restraining Order to block sale of Liverpool Football Club (Scribd)
- Personal jurisdiction: In which court can a defendant be sued? (Findlaw.com [US])
- Details of the high court verdict against the owners of Liverpool Football Club (The Solicitor)
- Tom Hicks and George Gillett statement about Texas court injunction (The Solicitor)
- Overview of corporate insolvency (Findlaw.co.uk)
- Bankruptcy and debt Q&A (Community)
- Insolvency law news (The Solicitor)
- Find a solicitor (Contact Law)