Linklaters criticised for alleged errors in professional negligence claim over Arsenal share sale
Claim brought by former Arsenal shareholder sheds light on magic circle firm's role in fate of Arsenal ownership
February 05, 2018 at 10:55 AM
4 minute read
The details of former Arsenal shareholder Lady Nina Bracewell-Smith's professional negligence claim against Linklaters have been laid out in a new High Court filing, which suggests that the law firm's errors played a part in her decision to sell her shares to the club's current majority owner, US businessman Stan Kroenke.
The magic circle firm and big four accountants Deloitte are being sued by Bracewell-Smith over their advice relating to the sale of her 15.9% stake in the Premier League club to Kroenke's company KSE in 2011.
In a particulars of claim form, filed on 31 January, Bracewell-Smith alleges that Linklaters was negligent and in breach of its duty of care in relation to advice given on loan notes she received in exchange for her stake in the club.
It goes on to claim that, but for the errors by both Linklaters and Deloitte, which allegedly exposed her to capital gains tax liabilities, she "would not have sold her Arsenal shares to KSE but rather would have sold them to Alisher Usmanov (or some other purchaser)".
Kroenke now owns a 67% stake in the club, with Russian businessman Usmanov holding 30%.
The Linklaters lawyers referenced in the claim are former partner Ian Bagshaw and associate Stuart Boyd, both of whom have since left the firm. Bagshaw, who left in 2013, is now global co-head of private equity at US firm White & Case, while Boyd joined Kirkland & Ellis in 2016 after making partner at Linklaters in 2013.
The claim states that the sale of Bracewell-Smith's shares "would be liable to capital gains tax (CGT) on a remittance basis in the event that the disposal took place in exchange for non-qualifying corporate bonds sited outside the UK".
However, the loan notes were instead registered and the register held at the London offices of Clifford Chance (CC) – KSE's advisers on the deal. According to the claim, siting the loan notes in the UK meant that if Bracewell-Smith "as an English tax resident, redeemed the loan notes, she would have been liable to pay CGT on their full value".
The claim states: "Linklaters should not have settled the documents and advised the claimant [Bracewell-Smith] to sign them unless they were sure that the documents satisfied any and all requirements for the loan notes to be non-qualifying bonds sited outside the UK."
Bracewell-Smith alleges that she was not adequately informed of what she describes as "the error as to the location of the register", with the filing stating that she was not told until 5 July 2011, despite an email being sent by Boyd to CC on 26 May 2011 requesting that KSE relocate the register of the loan notes outside of the UK.
The document states: "It is to be inferred that Linklaters and Deloitte deliberately chose not to inform the claimant of the true position and of their breaches of duty to her."
While Linklaters and Quinn Emanuel Urquhart & Sullivan subsequently attempted to persuade KSE to remove the register from the UK, their attempts were unsuccessful, prompting Bracewell-Smith to move to Monaco. In order to reduce her tax exposure, the filing states that she has to be non-resident in the UK for six consecutive tax years, leaving her based outside the UK until April 2019 at the earliest.
Bracewell-Smith claims that she has incurred losses of more than £10m as a result of the loan note error, as well as incurring costs of £1,249,815 for her move to Monaco and more than £400,000 in fees to professional advisers that she would not have required had the loan notes been sited outside the UK.
She is also claiming general damages for the "distress and inconvenience" she has suffered as a result of her relocation, which has impacted on her ability to return to the UK to visit friends and family.
West End firm Gordon Dadds is acting for Bracewell-Smith.
Two years after selling her stake in the club, Bracewell-Smith said that she "deeply" regretted selling to Kroenke, in tweets which have since been deleted. Arsenal's regular lawyers at Slaughter and May acted for the club on the 2011 sale.
Linklaters, White & Case, Deloitte, Boyd and Kirkland all declined to comment.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllBig Law Leaders, Dealmakers Optimistic about M&A Deal Flow Under Trump, With Caveats
5 minute readThe Law Firms Generating 8-Figure Fees on the Year's Big Ticket UK Deals
3 minute read'Significant' Competition Concerns Over £762M GXO Logistics-Wincanton Merger
Trending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250