THE announcement that Tom Hicks and George Gillett have ended their pursuit of damages against Liverpool directors both past and present finally drew a line under one of the darkest chapters in the club’s history.
The American co-owners’ deeply divisive and damaging three-and-a-half year reign may have ended in October 2010 but the threat of legal action had rumbled on until yesterday.
Hicks and Gillett claimed they were the victims of “an epic swindle at the hands of rogue corporate directors and their co-conspirators” when the club was sold by the Royal Bank of Scotland to John W Henry’s New England Sports Ventures (now Fenway Sports Group) in a £300million deal.
They insisted Liverpool had been “substantially unvalued” and that RBS had deliberately blocked their attempts to refinance. They filed a lawsuit against directors Sir Martin Broughton, Christian Purslow and Ian Ayre, who had outvoted Hicks and Gillett 3-2 to wreck their hopes of blocking the sale.
Hicks and Gillett, who claimed the club’s value was between £600million and £1billion, tried to sack Purslow and Ayre and reconstitute the board but that put them in breach of an agreement with RBS which permitted Broughton to lead the sale process and make decisions as to the composition of the boards.
Their appeal ended in defeat on a dramatic day in the High Court which saved Liverpool from going into administration and left the Americans with nothing.
News that a settlement has been reached was a significant relief for the trio who helped bring Liverpool back from the edge of the abyss.
Broughton was chairman at the time of the sale and Purslow was the chief executive. Ayre, who was commercial director, was subsequently promoted by Henry to his current role of managing director. They were directors of Kop Football (Holdings) Limited, the company used by Hicks and Gillett to control the Reds.
The trio were always confident that Hicks and Gillett would face another painful court defeat if it went to trial but nevertheless there is relief that the uncertainty is finally over.
The terms of the settlement are confidential but the ECHO believes that Hicks and Gillett were left utterly on the back foot and have not walked away with any kind of pay-off.
In fact they have had their fingers burned once again with a hefty bill for court costs dating back more than two years. Under the terms of the agreement, they have also withdrawn all their previous allegations against Broughton, Purslow and Ayre.
It emerged earlier this week that Hicks and Gillett had been ordered to pay around £1million as security if they wanted to continue the long-running legal battle over the sale of the club.
Their plea for the 10-week High Court trial – scheduled for April – to be delayed to give them more time to raise the money was thrown out by the Court of Appeal. That has resulted in the settlement and what is essentially an embarrassing climbdown by the shamed ex-owners.
The American businessman bought Liverpool in February 2007 after agreeing a £218million deal with David Moores. They made a raft of bold promises like building a new stadium in Stanley Park but none of them were kept.
Hicks and Gillett claimed they had used their own cash to buy Liverpool but it soon became clear they had taken out a large loan with Royal Bank of Scotland and saddled the club with debt. It was a leveraged buy-out – a massive mortgage with the interest payments quickly dumped on the club’s books.
Those debts continued to mount with the crippling interest payments severely hampering the Reds’ ability to compete in the transfer market.
Hicks and Gillett not only fell out with each other but there were also embarrassing public spats with manager Rafa Benitez and chief executive Rick Parry.
Unrest among supporters grew with large scale protests against the owners who were urged to sell up.
With debts spiralling out of control to in excess of £400million and a civil war waging at Anfield, Broughton was appointed chairman in April 2010 to oversee a sale.
With Hicks and Gillett desperately trying to cling on to power, Ayre has admitted that Liverpool were on the brink of administration.
“Certainly the bank had the power to call in the debt and at the time there wasn’t anyone ready to take on that debt,” he said in 2011.
“Based on where we were and based on the circumstances at the time administration was a very real threat. That was one of the other routes we could have gone down.
“We really were on the edge. What you had was a domino effect of things. Debt was going up and the cost of servicing the debt was beyond what we felt was reasonable.
“I don’t think I’ve ever really wanted to dare to dream where we would have got to but it didn’t look good and that was reason why Martin, Christian and myself and the others involved felt we had to find the right solution.”
In October 2010, with the backing of Broughton, Purslow and Ayre, RBS took Gillett and Hicks to the High Court to force them to allow the board to proceed with the sale to FSG and judge Mr Justice Floyd ruled in favour of the creditors.
Initially, Hicks and Gillett had vowed to also pursue FSG, as well as Broughton, Purslow, Ayre and RBS, for damages.
They filed a £1billion lawsuit in Texas and started legal proceedings in the States but that was curtailed when the High Court ruled any case would have to take place in the UK.
Hicks once boasted Liverpool would be his “most profitable investment”. Instead it hit him hard in the pocket.
Hicks and Gillett ended up losing around £144million – a figure which has since increased with their failed court action.
But the cost to them is still small in comparison to the huge price paid by Liverpool Football Club as a result of their acrimonious reign. They set the Reds back years and that damage is a legacy the current owners are still wrestling with.