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Former Liverpool FC owner George Gillett is still paying £125,000-a-month in debt repayments for his ill-fated purchase of the Reds - five years after he lost control of the club.

The sensational revelation was made in documents to the Supreme Court in New York where Gillett and Royal Bank of Scotland are being sued by Mill Financial, a company that lent the businessman $70m (£50m).

Mill Financial want a payout from Gillett and RBS after their last ditch effort to buy LFC in October 2010 failed.

Boston-based New England Sports Ventures, now called Fenway Sports Group, won the race to buy the Reds for £295m following a very public court case forced by RBS after Gillett and fellow owner Tom Hicks were unable to pay back a £280m debt secured against LFC.

Watch the ECHO's David Bartlett explain the George Gillett court case

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Mill started legal action against RBS and Gillett in November 2010.

Some 627 legal documents have been lodged with the court in the mammoth case, which has been running for five years and racked up millions of dollars in costs.

The case is being overseen by judge Eileen Bransten in the Commercial Division of New York’s Supreme Court.

Gillett, club chief executive Ian Ayre, and a representative of FSG (lawyer Edward Weiss) have all had to give evidence under oath to lawyers in the long-running case.

It has seen lawyers in London and New York argue over the finer points of international finance law. While financial experts have also given evidence of how a football club should be valued.

Mill claims “secret letters” and “clandestine activities” on behalf of RBS led to it incurring “substantial damages”.

The company is also targeting Gillett after he failed to repay a $70m loan he received from the Virginia-based firm in January, 2008 so he could meet RBS repayments. The legal papers claim Mill Financial were pledged 50% “membership interest in LFC” as a result of that investment.

The Gillett and Hicks era in pictures

Mill believe that the LFC board sold the club on the cheap and want compensation.

However, RBS have asked the judge to throw out the case on the basis that Mill has not suffered any financial loss from the sale of the club.

In RBS’s application the bank reveals that Gillett has been paying back $175,000-a-month (£125,000). He has so far paid back $33m.

Mill borrowed the $70m it lent Gillett from a bank called Wachovia, and has so far paid $23m back to Wachovia - leaving Mill with $10m.

Mill has a “forbearance agreement” with Wachovia, which means the bank is not chasing the company for the cash.

RBS’s lawyers argue in a letter to Judge Bransten: “Mill continues to receive $175,000 per month from a Gillett entity, and Mill has collected over $33 million on its $70 million loan while paying Wachovia only $23 million.

“The undisputed fact — that Mill has no out of pocket losses — mandates dismissal of the complaint

“In short, Mill’s entire complaint is premised on the theory that lack of notice of the sale process enhanced RBS’s security position to Mill’s detriment.

“The undisputed facts are to the contrary: RBS was the secured party with absolute priority in the collateral, Mill had actual contemporaneous notice and legal advice from its counsel on the April Agreements, and Mill advised the Club’s Board that it favored the sale process. Mill has suffered no damage...”

Mill claimed it vowed to bid £20m above any other price for the Reds, up to a ceiling of £385m.

But RBS say Mill’s draft bid was only for £100m, and was a paying down of the debt not a full offer to buy out the club.

Even when Judge Bransten has been able to make a decision in this long-running case, it may continue with the loser appealing.

ARCHIVE: LFC takeover takes another twist

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Excerpts from Mill Financial’s legal papers lift the lid on what they think their case is

As previously reported, Mill believe the club was sold at below its true value .

One section of their claim read: “Had Mill Financial taken over as the sole creditor, or had it substantially paid down RBS’s outstanding debt, Mill Financial would have worked with the owners to determine the best course of action to obtain repayment of its debt, including selling LFC at a time when the price for the team was not depressed by a distressed sale environment.

“Mill Financial also would have been in a position to acquire LFC for a price in excess of its outstanding debt, plus the amount of its $70m loan to Gillett Football.

“This would have allowed Mill Financial to eliminate the risk of a default on the Gillett Football loan while becoming the owner of one of the world’s most valuable sports teams.”

The papers claim a meeting between Mill Financial, then- Reds chairman Martin Broughton and an RBS representative on September 24, 2010, was rescheduled to October 7, while unknown to them a meeting took place on October 5 for a vote to accept an offer by NESV to buy Liverpool.

It said: “Just hours before the board meeting, Mill Financial received a call from the investment bank retained by the board, encouraging Mill Financial to submit a revised bid due to purported new developments.

“Separately, Mill Financial received a call at 3.30am from the investment bank retained at RBS’s insistence, stating that the board would be meeting the next day, and invited Mill Financial to submit any further materials in connection with its bid to purchase LFC.

“When Mill Financial’s counsel protested that they had been given this notice at 3.30am, with only six hours to spare before the board meeting, LFC’s counsel responded that ‘he was not responsible for [your] client’s nocturnal habits’.”

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