In a decision that could be seen as foreshadowing tomorrow's court dealings, the Royal Bank of Scotland (RBS) obtained a court injunction on Friday, an order preventing Liverpool owners Tom Hicks and George Gillett from reorganizing the club's board of directors.
On Friday, RBS is owed £280 in outstanding debts from Kop Holdings. Failure to repay that amount could find the club in administration, though an agreement with New England Sports Ventures to purchase the club would clear its debts.
On Tuesday, Hicks and Gillett had sought to replace directors Christian Purslow and Ian Arye ahead of a meeting to assess two bids to purchase the club. That meeting led to the board approving the bid from NESV, whose ownership of Liverpool was approved by the Premier League last week.
Tom Hicks has sought to replace Purslow and Arye with his son, Mack Hicks, and a business associate, Lori Kay McCutcheon. The move was blocked by Martin Broughton, the club's director, who consulted lawyers before deciding that the sole right to reorganize the club's board rested with him, part of the underwriting entered into at the time of his April appointment. Broughton proceeded with Tuesday's meeting, where NESV's £300 million bid was approved by a 3-2 vote.
Hicks and Gillett are to be heard by a High Court tomorrow at 10:30 a.m. BST, where Broughton is to seek declaratory judgment confirming his actions in selling the club. Then, Hicks and Gillett are expected to argue they had the right to reorganize that board, and as they had changed the board before Tuesday's vote, the sale of the club was not approved by its actual board of directors.
On Friday, the Royal Bank of Scotland where able to obtain an injunction preventing Hicks and Gillett from reorganizing the board of directors, affirming the position Broughton acted upon last week. Tomorrow in court, Hicks and Gillett will have to show the lender's position is erroneous.
Should the NESV sale go through, Liverpool's new owners will clear the club's debts; however, personal loans to the club made by Hicks and Gillett, loans totaling and estimated £144 million, would be cleared from the books unpaid.
RBS, who also revealed Liverpool has been in technical violation of their refinancing agreement for some time, issued a statement outlining the lender's position in relation to Kop Holdings, Liverpool's parent company:
"RBS in its capacity as lender to the Kop group of companies received the benefit of various contractual undertakings from Mr Hicks and Mr Gillett in relation to the corporate governance arrangements that Mr Hicks and Mr Gillett agreed would apply to the Kop group of companies with effect from April 2010.
"Those undertakings provided for the appointment of Mr Broughton as chairman of the board and the appointment of the chief executive and commercial director of LFC to the Kop boards.
"As is well known Mr Hicks and Mr Gillett purported to make changes to those corporate governance arrangements on 4 October. This was in breach of those contractual undertakings.
"In light of that purported breach of contract RBS sought and obtained on Friday 8 October 2010 an interim injunction against Mr Hicks and Mr Gillett until a further hearing scheduled for tomorrow.
"Among other things, that interim injunction prevents Mr Hicks or Mr Gillett taking any steps to remove or replace Mr Broughton from his position as chairman of the board of the Kop companies or from taking any other steps to appoint or remove any directors from the board of the Kop companies."