Liverpool takeover moving quickly

[ant london]

The directors have a fiduciary duty in law to act in the best interests of the company.

That means acting in the best interests of all stakeholders and creditors.

Legally, shareholders, come at the bottom of the "creditor" pecking order. Once all debts and expenses are paid they are entitled to all the "upside" but equally, when things go tits up, the shareholders take the biggest hit and get paid last.....or more likely not at all.

The economics of the LFC situation are that RBS are owed money, and have first place in that pecking order. If LFC is not able to repay/refinance the loan from RBS the bank can exercise its rights and put Liverpool into administration to ensure that its monies are repaid.

If the directors acted in line with H+G's wishes that is exactly what would happen.

This would mean that any sale would be in a distressed state at knock-down prices and lots of "normal" creditors (trade creditors, employees, HMRC) would be jeapordised.

Acting in line with H+G's wishes would be a clear breach of their duties as directors and that is precisely why they are not doing so.

Its irrelevant who appointed them. Once appointed their duty is to the company, NOT to any individual shareholder.

[blues-clues]

The directors have a fiduciary duty in law to act in the best interests of the company.

That means acting in the best interests of all stakeholders and creditors.

Legally, shareholders, come at the bottom of the "creditor" pecking order. Once all debts and expenses are paid they are entitled to all the "upside" but equally, when things go tits up, the shareholders take the biggest hit and get paid last.....or more likely not at all.

The economics of the LFC situation are that RBS are owed money, and have first place in that pecking order. If LFC is not able to repay/refinance the loan from RBS the bank can exercise its rights and put Liverpool into administration to ensure that its monies are repaid.

If the directors acted in line with H+G's wishes that is exactly what would happen.

This would mean that any sale would be in a distressed state at knock-down prices and lots of "normal" creditors (trade creditors, employees, HMRC) would be jeapordised.

Acting in line with H+G's wishes would be a clear breach of their duties as directors and that is precisely why they are not doing so.

Its irrelevant who appointed them. Once appointed their duty is to the company, NOT to any individual shareholder.

Ant, you may be right in theory but in many insolvency cases Directors do not act in the way you have described, especially if they have a personal stake (ie their own job or shares). The definition of "the Company" can be interpreted by directors in different ways, many Directors will try and keep a company going for too long because they see it as their duty to keep employees or customers "happy". Suppliers are always the losers in these cases and the shareholders sometimes lose everything as well but often Phoenix companies give the shareholders some return whereas it is suppliers who get turned over.

I suspect Liverpool is running an operating loss, so the new owners will look to cut costs and increase revenues as part of their plan. I strongly suspect that RBS will walk away happy with their debt repaid in full but the fans will not like it when assets are sold, staff are made redundant and ticket prices soar.

[ant london]

Mate I know that is what often happens in practice (and that is exactly what leads to such directors being disqualified and in some exteme cases having serious legal action taken against them).

In the case of Liverpool though the board of directors will be in no doubt whatsoever as to what their duties are and whose interests they cannot take the risk of jeapordising (ie the banks). They will have their own legal advice on this and RBS lawyers would have left them in no possible doubt as to the potential consequences for them (the board) personally if they put a legal step wrong.

This will be why they feel comfortable effectively "ignoring" H+G.

[blues-clues]

Absolutely agree with you! Each time there is an administration or liquidation the accountants have to file a report on the directors to Companies House as part of their duties. To get disqualified though you virtually have to commit serial fraud or theft. In theory a director can be disqualified for writing a single cheque where it can be shown that the director knew the cheque was going to bounce when he wrote it but in practice you can get away with murder before you get banned.

I do think it is different in this case though. Broughton was specifically appointed by RBS to preotect their interests. RBS dont give a toss about the other suppliers or creditors they just want their money and have done what it takes to make sure they get it. The penalty clause is the killer. In effect they have taken control of LFC for £60m.

The red sox people are getting an absolute bargain. It is just like the spanish proopreties you can buy from the banks where they are just looking to get back the outstanding mortgage balance. In some cases this is less than 40% of the "value" of the property but the banks have got their money back so they are happy. The shareholders are the ones who lose everything just because they cannot service their debts from cash flow.

[Murph]

H & G should have taken the Dubai money when they had the chance. Shows what happens when you get greedy.

[david yearsley]

Absolutely agree with you! Each time there is an administration or liquidation the accountants have to file a report on the directors to Companies House as part of their duties. To get disqualified though you virtually have to commit serial fraud or theft. In theory a director can be disqualified for writing a single cheque where it can be shown that the director knew the cheque was going to bounce when he wrote it but in practice you can get away with murder before you get banned.

I do think it is different in this case though. Broughton was specifically appointed by RBS to preotect their interests. RBS dont give a toss about the other suppliers or creditors they just want their money and have done what it takes to make sure they get it. The penalty clause is the killer. In effect they have taken control of LFC for £60m.

The red sox people are getting an absolute bargain. It is just like the spanish proopreties you can buy from the banks where they are just looking to get back the outstanding mortgage balance. In some cases this is less than 40% of the "value" of the property but the banks have got their money back so they are happy. The shareholders are the ones who lose everything just because they cannot service their debts from cash flow.

Only a bargain in as far as what they would have had to pay pre 2008 say . Still got 200m plus of debt to clear , costs , then there´s the small matter of a new stadium and transfer kitty - LFC have a serious chicken and egg problem here . No CL , no revenue to fund transfers and attract the best players to the top competition; no new stadium, no increase in gate receipts etc..etc...
How are they going to fund it - leverage? Or maybe they´ll just be acting like a private equity firm - get in , restructure , downsize , get out - 50-100m in their bin - will be interesting

[ant london]

H & G should have taken the Dubai money when they had the chance. Shows what happens when you get greedy.

They have several chances to exit but have asked for very unrealistic prices each time and the deals have ultimately collapsed.

[Beefymcfc]

Anyone know what's happened with the proposed sacking of the board by H&G; surely this would be an illegal act?

[Dameerto]

Anyone know what's happened with the proposed sacking of the board by H&G; surely this would be an illegal act?

No idea what's happened but it's hot air from them in my opinion, I'm not an expert but I don't see how H&G have any grounds to act against them. I would be very surprised if they even made it to court.

[Wonderwall]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

[Manx Blue]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

A most pleasant day indeed!

[Mark (Blue Army)]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

Where did you hear about the 9 point deduction, because im sure i read the Premier League said they wouldn't deduct any points from them.

[ENIAM NAM]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

Where did you hear about the 9 point deduction, because im sure i read the Premier League said they wouldn't deduct any points from them.

http://news.bbc.co.uk/sport1/hi/footbal ... 074311.stm

[Dameerto]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

If Carlsburg did Fridays...

[Slim]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

Where did you hear about the 9 point deduction, because im sure i read the Premier League said they wouldn't deduct any points from them.

http://www.dailymail.co.uk/sport/footba ... ation.html

Liverpool seem likely to face a nine point deduction if parent company Kop Holdings goes into administration.

If a parent company insolvency is caused by the club's management league rules say a points deduction could be the result.

Co-owners Tom Hicks and George Gillett could well find it difficult to argue that the running of the club has not affected the holding company.

Liverpool could enter administration if a sale to the owners of the Boston Red Sox is not completed by next Friday.

If Hicks and Gillett manage to block a takeover of the club by New England Sports Ventures (NESV), their holding company could be put into administration by the Royal Bank of Scotland as a result of their £280m debts.

And the BBC are reporting that if that happens the struggling club could be penalised where it hurts most, on the pitch.
What's going on? Liverpool have had a terrible start to the season

What's going on? Liverpool have had a terrible start to the season

Any points loss would be a huge blow for Liverpool, who have had a dreadful first two months of the season.

The Merseysiders have picked up seven points from their first six matches of the Premier League, and are in the relegation zone.

Portsmouth became the first Premier League club to enter administration earlier this year, and they were automatically given a nine-point penalty.

[The Man In Blue]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

Cheered me up no end that!

[Beefymcfc]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

Where did you hear about the 9 point deduction, because im sure i read the Premier League said they wouldn't deduct any points from them.

If a club goes into administration, then they've got to get a points deduction; surely? How could the poor little scousers get away with it?

[john@staustell]

What a great day, Liverpool have been advised they might face a nine point deduction and the rags have heaped a whopping £80m on top of their debts.. Liverpool are in the relegation zone and we are 2nd and above the rags

Oh and its friday :-)

Where did you hear about the 9 point deduction, because im sure i read the Premier League said they wouldn't deduct any points from them.

If a club goes into administration, then they've got to get a points deduction; surely? How could the poor little scousers get away with it?

9 points it will be mate. If..........................

[Mark (Blue Army)]

No i agree but im sure i read that the premier League won't take any action against them, lets just wait and see i suppose.

[Beefymcfc]

Breaking News: NESV aloud to go ahead with takeover of Liverpool by FA.

I thought G&H had sacked the board?