Texas court halts sale of Dippers

[Cambridgeblue]

Having been there for the Tuesday hearing and the Wednesday verdict I can categorically state that the question of whether the duties of the directors (which are statutory and not fiduciary following the Companies Act 2006) were somehow bypassed by the CGSL was not pleaded by either side.

As this was an interim application made at very short notice by RBS there was no way that sufficient evidence would have been available for Hicks & Gillette to argue the point which is why one of the applications made by counsel for Hicks and Gillette was for disclosure of documents (which was granted by Mr Justice Floyd).

What I took issue with is BobKowalski's assertion that the High Court disagreed with me, something he was in no position to know because, and please correct me if I'm wrong, he was not there.

The fact remains that directors owe a duty to promote the success of the company for the benefit of its members as a whole... that is legal fact enshrined in statute and unless a judge rules differently based on the novel aspect of the terms of the CGSL (which I freely admit are not fully known) it is reasonable to assert that that is the default position under English law.

The fact that counsel for Hicks and Gillette explicitly stated the possibility of a double derivative action in the event the NESV deal went through suggests to me that they intend to test this point at full trial.

I would also point out that the judge's verdict is not a complete record of what was said by the parties in a trial or application - you would instead need to refer to the transcript of the trial (if one was indeed produced). Everything I have written on here with regard to the specific goings on in court has been from my own notes which I took at the time of the application hearing and subsequent judgement.

I very much doubt, the decision being a High Court one, that a full transcript of the trial will be produced (or if the issue does not go to an appeal, even a judges verdict report on a legal database is somewhat unlikely for some time- though I stated this would shed some light as it would be the more likely attainable document, pending further trials).

As I pointed out earlier in the thread to another member you, having been to the trial, are more acquainted with the facts of the case than others merely reading media reports- so thanks for clearing up the uncertainty of whether the AoA and directors duties were advanced and advocated during the trial (seemingly not).

As a default position I would agree with you that it would be contrary to CA 2006 and any case that I have before read, for a board of directors to sell the company without regard to the 'benefit of the company as a whole'. It will be interesting if this, as it appears, goes on to a full trial on appeal as the role RBS played, in negotiations both in previous months (when the re-structuring of leveraged debt was agreed) and now, was obviously a significant one. It seems to be the case that RBS, having played a role in the appointment of MB, also forced upon H&G a change of boardroom power in the Articles of Association so that this type of event could happen (a sale without the permission of H&G). I would agree with you here that the board should still have had a fiduciary duty to act in the best interests of the 'company as a whole' under §171-177 CA 2006, however this may be a case (the first I can think of) where §172 will be argued by the board as the rationale for the selling decision. Inconceivable, I know, as §172 since its inception has been thought of as 'window-dressing' and, in reality, not in the self-interest of directors. It will further be interesting to see whether, subject to appeal, the board has acted with proper purpose (as seemingly the finance forwarded by Mills was rejected by both the board and RBS).

To postulate on this matter further, the priority relationship- between the directors duties to the company (since administration was pending) and, with this to mind, directors duties to the creditors- is unclear and a string of case law for prioritising either can be drawn from precedent. Maybe the fact that Administration was a certainty formed part of the decision not to strictly adhere to §171-177. A definitive decision on this basis would be an authoritative one that could refine and bring clarity to the law- for this reason a court case argued on this basis may be, as well as quite entertaining for those looking in, important.

I agree the creditor issue does complicate things but I believe that the duty to the senior creditors (RBS and Wells Fargo) ceases to operate once a bid is sufficiently large to cover those creditors... which appears to have been the case with both the NESV bid, the bid from Peter Kim and the attempt at gaining control by Mill Financial.

We shall see as and when this case goes to full trial... I know c4 news were reporting that an unnamed source close to H&G that they were not going to seek the £1bn damages claimed but I would be surprised if this was entirely true. £1bn is a ridiculous figure but it is not beyond the realms of possibility to see them attempting to claim anywhere from £20-£100m depending on what the actual market value of the club was (which would be evidenced with reference to the Peter Lim bid and the potential Mill Finance bid).

 

[Kirkstall Blue]

It remains to be seen if H&G have been stupid, the outcome of any lawsuit will clarify their position. My initial reaction was they've been stitched up by the RBS. but if they walk away with $1.6 billion or an out of court settlement, then I'd say they knew what they were doing all along, especially since they took out the Dallas injunction which laid out there case. Then they lifted it, because they were forced to. (which they must have known before they took it out)

 

[mike channon´s windmill]

Having been there for the Tuesday hearing and the Wednesday verdict I can categorically state that the question of whether the duties of the directors (which are statutory and not fiduciary following the Companies Act 2006) were somehow bypassed by the CGSL was not pleaded by either side.

As this was an interim application made at very short notice by RBS there was no way that sufficient evidence would have been available for Hicks & Gillette to argue the point which is why one of the applications made by counsel for Hicks and Gillette was for disclosure of documents (which was granted by Mr Justice Floyd).

What I took issue with is BobKowalski's assertion that the High Court disagreed with me, something he was in no position to know because, and please correct me if I'm wrong, he was not there.

The fact remains that directors owe a duty to promote the success of the company for the benefit of its members as a whole... that is legal fact enshrined in statute and unless a judge rules differently based on the novel aspect of the terms of the CGSL (which I freely admit are not fully known) it is reasonable to assert that that is the default position under English law.

The fact that counsel for Hicks and Gillette explicitly stated the possibility of a double derivative action in the event the NESV deal went through suggests to me that they intend to test this point at full trial.

I would also point out that the judge's verdict is not a complete record of what was said by the parties in a trial or application - you would instead need to refer to the transcript of the trial (if one was indeed produced). Everything I have written on here with regard to the specific goings on in court has been from my own notes which I took at the time of the application hearing and subsequent judgement.

I very much doubt, the decision being a High Court one, that a full transcript of the trial will be produced (or if the issue does not go to an appeal, even a judges verdict report on a legal database is somewhat unlikely for some time- though I stated this would shed some light as it would be the more likely attainable document, pending further trials).

As I pointed out earlier in the thread to another member you, having been to the trial, are more acquainted with the facts of the case than others merely reading media reports- so thanks for clearing up the uncertainty of whether the AoA and directors duties were advanced and advocated during the trial (seemingly not).

As a default position I would agree with you that it would be contrary to CA 2006 and any case that I have before read, for a board of directors to sell the company without regard to the 'benefit of the company as a whole'. It will be interesting if this, as it appears, goes on to a full trial on appeal as the role RBS played, in negotiations both in previous months (when the re-structuring of leveraged debt was agreed) and now, was obviously a significant one. It seems to be the case that RBS, having played a role in the appointment of MB, also forced upon H&G a change of boardroom power in the Articles of Association so that this type of event could happen (a sale without the permission of H&G). I would agree with you here that the board should still have had a fiduciary duty to act in the best interests of the 'company as a whole' under §171-177 CA 2006, however this may be a case (the first I can think of) where §172 will be argued by the board as the rationale for the selling decision. Inconceivable, I know, as §172 since its inception has been thought of as 'window-dressing' and, in reality, not in the self-interest of directors. It will further be interesting to see whether, subject to appeal, the board has acted with proper purpose (as seemingly the finance forwarded by Mills was rejected by both the board and RBS).

To postulate on this matter further, the priority relationship- between the directors duties to the company (since administration was pending) and, with this to mind, directors duties to the creditors- is unclear and a string of case law for prioritising either can be drawn from precedent. Maybe the fact that Administration was a certainty formed part of the decision not to strictly adhere to §171-177. A definitive decision on this basis would be an authoritative one that could refine and bring clarity to the law- for this reason a court case argued on this basis may be, as well as quite entertaining for those looking in, important.

Learned Dr - for us laymen could you sum up what 172 says in a nutshell? Cheers

 

[Damocles]

It's their year this year.

 

[cleavers]

I'm disgusted by the outcome of this whole debacle.

Its clear that Liverpool have been in administration in all but name for the last 6 months. RBS could have called in their debts 6 months ago but instead just took control of the board and appointed their own directors to go out and recover the debt.

The disgusting thing is that by doing it this way Liverpool avoided the 9 point penalty that they should have received - and this at a time when they were still in with a chance of making 4th place. Disgusting.

Anyone not of a scouse persuasion should boycott RBS after all it was no doubt the backlash they feared from placing Liverpool into administration - especially as they were also govt owned with political implications of doing so - that prevented them doing so and instead just seizing control.

Rather than being stupid H&G simply had no choice (for they clearly couldn't meet their obligations) but to take that offer in the now foolish belief that RBS would look to achieve full value for the club precisely because they weren't a club officially in administration. The reality was that Liverpool were a club in administration in all but name.

I will never do business with RBS.

Sums it up for me as well mate and is the reasons im disgusted by it all.

Fair and level playing field for all.........MY ARSE!

LOL, I don't think I will bother changing my bank of 31 years over this.

Anyone outraged by the way a bank looks after itself, wouldn't ever use a bank, and there are a shit load of other, much worse, reasons to boycott a bank.

Liverpool are slightly less screwed this week than they were last week, unless NESV have some large rabbit in their hat.

 

[BobKowalski]

Having been there for the Tuesday hearing and the Wednesday verdict I can categorically state that the question of whether the duties of the directors (which are statutory and not fiduciary following the Companies Act 2006) were somehow bypassed by the CGSL was not pleaded by either side.

As this was an interim application made at very short notice by RBS there was no way that sufficient evidence would have been available for Hicks & Gillette to argue the point which is why one of the applications made by counsel for Hicks and Gillette was for disclosure of documents (which was granted by Mr Justice Floyd).

What I took issue with is BobKowalski's assertion that the High Court disagreed with me, something he was in no position to know because, and please correct me if I'm wrong, he was not there.

The fact remains that directors owe a duty to promote the success of the company for the benefit of its members as a whole... that is legal fact enshrined in statute and unless a judge rules differently based on the novel aspect of the terms of the CGSL (which I freely admit are not fully known) it is reasonable to assert that that is the default position under English law.

The fact that counsel for Hicks and Gillette explicitly stated the possibility of a double derivative action in the event the NESV deal went through suggests to me that they intend to test this point at full trial.

I would also point out that the judge's verdict is not a complete record of what was said by the parties in a trial or application - you would instead need to refer to the transcript of the trial (if one was indeed produced). Everything I have written on here with regard to the specific goings on in court has been from my own notes which I took at the time of the application hearing and subsequent judgement.

I very much doubt, the decision being a High Court one, that a full transcript of the trial will be produced (or if the issue does not go to an appeal, even a judges verdict report on a legal database is somewhat unlikely for some time- though I stated this would shed some light as it would be the more likely attainable document, pending further trials).

As I pointed out earlier in the thread to another member you, having been to the trial, are more acquainted with the facts of the case than others merely reading media reports- so thanks for clearing up the uncertainty of whether the AoA and directors duties were advanced and advocated during the trial (seemingly not).

As a default position I would agree with you that it would be contrary to CA 2006 and any case that I have before read, for a board of directors to sell the company without regard to the 'benefit of the company as a whole'. It will be interesting if this, as it appears, goes on to a full trial on appeal as the role RBS played, in negotiations both in previous months (when the re-structuring of leveraged debt was agreed) and now, was obviously a significant one. It seems to be the case that RBS, having played a role in the appointment of MB, also forced upon H&G a change of boardroom power in the Articles of Association so that this type of event could happen (a sale without the permission of H&G). I would agree with you here that the board should still have had a fiduciary duty to act in the best interests of the 'company as a whole' under §171-177 CA 2006, however this may be a case (the first I can think of) where §172 will be argued by the board as the rationale for the selling decision. Inconceivable, I know, as §172 since its inception has been thought of as 'window-dressing' and, in reality, not in the self-interest of directors. It will further be interesting to see whether, subject to appeal, the board has acted with proper purpose (as seemingly the finance forwarded by Mills was rejected by both the board and RBS).

To postulate on this matter further, the priority relationship- between the directors duties to the company (since administration was pending) and, with this to mind, directors duties to the creditors- is unclear and a string of case law for prioritising either can be drawn from precedent. Maybe the fact that Administration was a certainty formed part of the decision not to strictly adhere to §171-177. A definitive decision on this basis would be an authoritative one that could refine and bring clarity to the law- for this reason a court case argued on this basis may be, as well as quite entertaining for those looking in, important.

Just to clarify an important issue raised by CB. I was not present at the hearing :)

The Directors have a duty to the shareholders and 'to the the company as a whole' namely LFC. In this instance the duty to the Company was to find an interested buyer with the necessary funds to make the purchase and preferably with some expertise in running a sporting company. It was imperative for the good of the company that such credible buyer be found prior to the main creditor calling in the debt thereby causing LFC to go into administration with the subsequent harm such an action would cause the company. It would seem on the face of it that Broughton and the other Directors have been successful in looking after the best interests of the company as a whole (or so far it does after all who knows how it will pan out in the future).

Looking after the interests of the company as a whole can and in this case did come into conflict with individual directors whose agenda was first their own personal financial remuneration and second the interests of the company as a whole. These directors may have been the named shareholders but they were also a minority on the board who were primarily concerned for the interests of the company and not the shareholders who had voluntarily surrendered control of the company they owned in return for refinancing.

H&G had ample time and opportunity to raise the necessary funds with which to satisfy the main creditor and subsequently reconstitute the board in their favour. They did not do so and have now paid the price based on the agreement they voluntarily entered into with RBS.

Whilst H&G will no doubt cry foul and attempt to seek redress for their losses via the courts with claims of sensational new evidence and conspiracy by the British Establishment I still see zero chance of them actually succeeding although it promises to be very entertaining.

 

[Dr.Faustus]

I very much doubt, the decision being a High Court one, that a full transcript of the trial will be produced (or if the issue does not go to an appeal, even a judges verdict report on a legal database is somewhat unlikely for some time- though I stated this would shed some light as it would be the more likely attainable document, pending further trials).

As I pointed out earlier in the thread to another member you, having been to the trial, are more acquainted with the facts of the case than others merely reading media reports- so thanks for clearing up the uncertainty of whether the AoA and directors duties were advanced and advocated during the trial (seemingly not).

As a default position I would agree with you that it would be contrary to CA 2006 and any case that I have before read, for a board of directors to sell the company without regard to the 'benefit of the company as a whole'. It will be interesting if this, as it appears, goes on to a full trial on appeal as the role RBS played, in negotiations both in previous months (when the re-structuring of leveraged debt was agreed) and now, was obviously a significant one. It seems to be the case that RBS, having played a role in the appointment of MB, also forced upon H&G a change of boardroom power in the Articles of Association so that this type of event could happen (a sale without the permission of H&G). I would agree with you here that the board should still have had a fiduciary duty to act in the best interests of the 'company as a whole' under §171-177 CA 2006, however this may be a case (the first I can think of) where §172 will be argued by the board as the rationale for the selling decision. Inconceivable, I know, as §172 since its inception has been thought of as 'window-dressing' and, in reality, not in the self-interest of directors. It will further be interesting to see whether, subject to appeal, the board has acted with proper purpose (as seemingly the finance forwarded by Mills was rejected by both the board and RBS).

To postulate on this matter further, the priority relationship- between the directors duties to the company (since administration was pending) and, with this to mind, directors duties to the creditors- is unclear and a string of case law for prioritising either can be drawn from precedent. Maybe the fact that Administration was a certainty formed part of the decision not to strictly adhere to §171-177. A definitive decision on this basis would be an authoritative one that could refine and bring clarity to the law- for this reason a court case argued on this basis may be, as well as quite entertaining for those looking in, important.

I agree the creditor issue does complicate things but I believe that the duty to the senior creditors (RBS and Wells Fargo) ceases to operate once a bid is sufficiently large to cover those creditors... which appears to have been the case with both the NESV bid, the bid from Peter Kim and the attempt at gaining control by Mill Financial.

We shall see as and when this case goes to full trial... I know c4 news were reporting that an unnamed source close to H&G that they were not going to seek the £1bn damages claimed but I would be surprised if this was entirely true. £1bn is a ridiculous figure but it is not beyond the realms of possibility to see them attempting to claim anywhere from £20-£100m depending on what the actual market value of the club was (which would be evidenced with reference to the Peter Lim bid and the potential Mill Finance bid).

If it does go to trial again in the UK, £1bn is almost certainly unachievable. I think even £100m is a stretch, though it does depend on the disclosure of the size of the bids from other parties (though since the Mills bid was presumably a guise for Hicks to continue I doubt the court, though it will not expressly state it, will give the valuation too much credence). As an asset, it is somewhat doubtful that the NESV undervalued LFC by much (considering the debt in relation to the profit margins at the club and potential for future income), especially in the current climate. We shall see... I'm sure it will be interesting.

 

[cleavers]

Just to clarify an important issue raised by CB. I was not present at the hearing :)

The Directors have a duty to the shareholders and 'to the the company as a whole' namely LFC. In this instance the duty to the Company was to find an interested buyer with the necessary funds to make the purchase and preferably with some expertise in running a sporting company. It was imperative for the good of the company that such credible buyer be found prior to the main creditor calling in the debt thereby causing LFC to go into administration with the subsequent harm such an action would cause the company. It would seem on the face of it that Broughton and the other Directors have been successful in looking after the best interests of the company as a whole (or so far it does after all who knows how it will pan out in the future).

Looking after the interests of the company as a whole can and in this case did come into conflict with individual directors whose agenda was first their own personal financial remuneration and second the interests of the company as a whole. These directors may have been the named shareholders but they were also a minority on the board who were primarily concerned for the interests of the company and not the shareholders who had voluntarily surrendered control of the company they owned in return for refinancing.

H&G had ample time and opportunity to raise the necessary funds with which to satisfy the main creditor and subsequently reconstitute the board in their favour. They did not do so and have now paid the price based on the agreement they voluntarily entered into with RBS.

Whilst H&G will no doubt cry foul and attempt to seek redress for their losses via the courts with claims of sensational new evidence and conspiracy by the British Establishment I still see zero chance of them actually succeeding although it promises to be very entertaining.

So in laymans terms......

I borrow £200,000 from a n other bank for my house, then a few years in, I can't make the interest payments, so they repossess my house. After losing a court hearing over the matter, I sue the bank for £1m damages.

I can see I'm bound to win that one.

 

[fbloke]

Just to clarify an important issue raised by CB. I was not present at the hearing :)

The Directors have a duty to the shareholders and 'to the the company as a whole' namely LFC. In this instance the duty to the Company was to find an interested buyer with the necessary funds to make the purchase and preferably with some expertise in running a sporting company. It was imperative for the good of the company that such credible buyer be found prior to the main creditor calling in the debt thereby causing LFC to go into administration with the subsequent harm such an action would cause the company. It would seem on the face of it that Broughton and the other Directors have been successful in looking after the best interests of the company as a whole (or so far it does after all who knows how it will pan out in the future).

Looking after the interests of the company as a whole can and in this case did come into conflict with individual directors whose agenda was first their own personal financial remuneration and second the interests of the company as a whole. These directors may have been the named shareholders but they were also a minority on the board who were primarily concerned for the interests of the company and not the shareholders who had voluntarily surrendered control of the company they owned in return for refinancing.

H&G had ample time and opportunity to raise the necessary funds with which to satisfy the main creditor and subsequently reconstitute the board in their favour. They did not do so and have now paid the price based on the agreement they voluntarily entered into with RBS.

Whilst H&G will no doubt cry foul and attempt to seek redress for their losses via the courts with claims of sensational new evidence and conspiracy by the British Establishment I still see zero chance of them actually succeeding although it promises to be very entertaining.

So in laymans terms......

I borrow £200,000 from a n other bank for my house, then a few years in, I can't make the interest payments, so they repossess my house. After losing a court hearing over the matter, I sue the bank for £1m damages.

I can see I'm bound to win that one.

It is likely to be about how much they have lost in earnings from the asset.

So much is Liverpool worth in those terms? Without CL footy?

 

[Dr.Faustus]

I very much doubt, the decision being a High Court one, that a full transcript of the trial will be produced (or if the issue does not go to an appeal, even a judges verdict report on a legal database is somewhat unlikely for some time- though I stated this would shed some light as it would be the more likely attainable document, pending further trials).

As I pointed out earlier in the thread to another member you, having been to the trial, are more acquainted with the facts of the case than others merely reading media reports- so thanks for clearing up the uncertainty of whether the AoA and directors duties were advanced and advocated during the trial (seemingly not).

As a default position I would agree with you that it would be contrary to CA 2006 and any case that I have before read, for a board of directors to sell the company without regard to the 'benefit of the company as a whole'. It will be interesting if this, as it appears, goes on to a full trial on appeal as the role RBS played, in negotiations both in previous months (when the re-structuring of leveraged debt was agreed) and now, was obviously a significant one. It seems to be the case that RBS, having played a role in the appointment of MB, also forced upon H&G a change of boardroom power in the Articles of Association so that this type of event could happen (a sale without the permission of H&G). I would agree with you here that the board should still have had a fiduciary duty to act in the best interests of the 'company as a whole' under §171-177 CA 2006, however this may be a case (the first I can think of) where §172 will be argued by the board as the rationale for the selling decision. Inconceivable, I know, as §172 since its inception has been thought of as 'window-dressing' and, in reality, not in the self-interest of directors. It will further be interesting to see whether, subject to appeal, the board has acted with proper purpose (as seemingly the finance forwarded by Mills was rejected by both the board and RBS).

To postulate on this matter further, the priority relationship- between the directors duties to the company (since administration was pending) and, with this to mind, directors duties to the creditors- is unclear and a string of case law for prioritising either can be drawn from precedent. Maybe the fact that Administration was a certainty formed part of the decision not to strictly adhere to §171-177. A definitive decision on this basis would be an authoritative one that could refine and bring clarity to the law- for this reason a court case argued on this basis may be, as well as quite entertaining for those looking in, important.

Just to clarify an important issue raised by CB. I was not present at the hearing :)

The Directors have a duty to the shareholders and 'to the the company as a whole' namely LFC. In this instance the duty to the Company was to find an interested buyer with the necessary funds to make the purchase and preferably with some expertise in running a sporting company. It was imperative for the good of the company that such credible buyer be found prior to the main creditor calling in the debt thereby causing LFC to go into administration with the subsequent harm such an action would cause the company. It would seem on the face of it that Broughton and the other Directors have been successful in looking after the best interests of the company as a whole (or so far it does after all who knows how it will pan out in the future).

Looking after the interests of the company as a whole can and in this case did come into conflict with individual directors whose agenda was first their own personal financial remuneration and second the interests of the company as a whole. These directors may have been the named shareholders but they were also a minority on the board who were primarily concerned for the interests of the company and not the shareholders who had voluntarily surrendered control of the company they owned in return for refinancing.

H&G had ample time and opportunity to raise the necessary funds with which to satisfy the main creditor and subsequently reconstitute the board in their favour. They did not do so and have now paid the price based on the agreement they voluntarily entered into with RBS.

Whilst H&G will no doubt cry foul and attempt to seek redress for their losses via the courts with claims of sensational new evidence and conspiracy by the British Establishment I still see zero chance of them actually succeeding although it promises to be very entertaining.

Whilst I can see how a duty to the company can be construed in many ways, as a litany of case law will attest to, the particulars of this situation could favour the board or H&G(Mills by proxy). As I stated previously, to state positively either way presupposes knowledge of the contents of the refinancing contract, the AoA and the agreements/disagreements over the last few days- which as of yet, cannot be known.