Tuesday, 16 September 2014
Last updated 4 min ago
Nov 22 2010 | 9:32am ET
A Virginia hedge fund has sued the former co-owner of British soccer team Liverpool Football Club, alleging that he defaulted on a $70 million loan.
Mill Financial extended the loan—which featured a mere 19% interest rate—almost three years ago to George Gillett, who purchased Liverpool with private equity honcho Tom Hicks a year earlier. The loan was used to invest in the soccer team, Mill alleges, but very little has been paid back.
According to Mill, Gillett, who also formerly owned hockey's Montréal Canadiens, has paid only $431,081 through September, which was "not sufficient to cure the default."
Springfield, Va.-based Mill is seeking $117.2 million, including fees and legal expenses. The loan, which was "amended several times," was due on Aug. 13 after a number of extensions. According to the hedge fund, Gillett's personal guaranties "waived every defense, cause of action, counterclaim or setoff which the guarantor may now have or hereafter have to any action" by Mill.
Gillett did not comment on the lawsuit, filed in New York state court. Hicks was not named in the suit, but is no stranger to defaults: His default on more than $500 million in debt, first reported last year by FINalternatives, precipated his sale of baseball team the Texas Rangers.
Gillett and Hicks were forced to sell Liverpool to hedge fund manager John Henry's New England Sports Ventures, which owns the Boston Red Sox, in a deal characterized by Hicks as an "epic swindle." The two men tried to litigate a stop to that sale, and at the last minute sought to sell their shares to Mill in a move vetoed by the English Premier League.
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