Rick Parry: 'We thought they might fire us. It has been a nightmare – a dreadful year'

Liverpool's chief executive Rick Parry has revealed the "nightmare" of working under the co-ownership of Tom Hicks and said that he has been in fear of the sack for months as their relationship has deteriorated.

It was Parry's work behind the scenes last December that ensured that most of the refinanced loans taken out for the purchase of Liverpool by Hicks and George Gillett jnr were secured against the Americans' holding company, rather than the club, and Parry told The Independent yesterday that he knew from that moment that Hicks would want to remove both him and former chairman David Moores, who received £88m for selling his 51.6% stake to Hicks and who retains a seat on the board. Parry's suspicions were confirmed on Thursday when a letter arrived from Hicks, demanding he quit.

"David and I thought we would be out on our ears in December. We thought they [Hicks and Gillett] might fire us," said Parry, who is seeking legal advice over Hicks' demand. "They didn't, to be fair, though what we did has not been forgotten. It's been a nightmare throughout – a dreadful year."

Though Hicks' relationship with Parry has soured, the chief executive has established a cordial relationship with Gillett, who telephoned him to assure him of his support after the Hicks camp let details of the letter be known. The reassurance did not come immediately for Parry. He messaged Gillett to say 'have you seen this?' after one of Parry's own family saw news of Hicks' demand on Sky Sports News. Gillett – on a flight and uncontactable – had not, though Hicks had copied him in on it. It was after Gillett completed several flights that the two spoke. Parry does not intend to speak to Hicks. "I have made my position clear to him," he said.

Parry revealed that Hicks and Gillett are now planning to enter a process of arbitration to resolve the impasse over the club's ownership, in which Hicks is refusing to allow Gillett to sell to suitors Dubai International Capital (DIC). Parry admitted that the situation needed to be resolved by next month if Liverpool's plans for next season were not to be placed in serious jeopardy. "This is not fatal but if you slip into May/June [without a transfer strategy] it's more difficult," he said.

It seems increasingly unlikely that Hicks will find the money to take control at Anfield – a move which, in Parry's words, would put himself "out of the door". There is no sign of the minority investors the Texan has said he has lined up and the publicity generated by his frequent statements are understood to have made some London financiers unwilling to get involved. Merrill Lynch's New York office has recently been engaged to raise funds.

Against this backdrop, Parry said yesterday that Hicks' demand for his resignation was the desperate act of "a vindictive man" that demonstrated that, contrary to reports last Sunday that he might be 10 days away from securing control of the club, he is nowhere near. "If he is so confident he is going to buy the club in 10 days, why not just wait until then and sack me?"

A public statement of support for Parry from Gillett provided some succour for the former Premier League chief executive yesterday. As well as declaring "full support" for Parry, Gillett added: "Any decision to remove him would need the full support of the Liverpool board which, it should be remembered, consists of six people – myself , Foster [Gillett's son], David Moores, Rick himself, Tom Hicks and Tom junior. We have not seen the document in question and we were not party to it. We are not able to comment on the detail because we have not seen it."

But the depth of the damage done to the club was evident yesterday when, for the first time in his four-year career at Anfield, Rafael Benitez was forced to cancel his weekly press briefing, which would have focussed on Liverpool's triumph over Arsenal. It was the club's decision to cancel, but Benitez is understood to have been worried being drawn into the factional strife in which he had been seen as pro-Hicks and anti-Parry.

Though Parry was at first convinced that the Americans represented the way forward for Liverpool – "to them, our virtues, heritage and culture are precious assets that will help to inspire everyone connected with us to continue to strive for further success – both on and off the field," he told shareholders 14 months ago. Hicks' incongruity at the club was evident from the start.

One insider recalled yesterday the embarrassment felt when Hicks arrived at last year's Champions League tie at home to Barcelona with "a huge red scarf around his neck." He was, said the source, "a nightmare at the stadium that night."

But it is the breakdown of the relationship between Hicks and Gillett which is creating factions at the club and has done most to poison the Texan's relationship with Parry. Gillett was furious when Hicks went public about discussions with Jürgen Klinsmann about the manager's job in January – discussions which Gillett initiated but which Hicks then took over and monopolised.

The way in which the refinancing of the debt was announced in February was a significant moment in the deepening fissure between the two. Hicks insisted on a press release revealing the news while Gillett did not since he did not consider it something to be triumphal about. Gillett insisted that his name be kept off Hicks' press release. The division plumbed new depths when Gillett made a public attack on Hicks on Canadian radio last month and the view from within Anfield is that that attack was a pre-emptive strike by Gillett, ahead of Hicks' renewed pursuit of funds to buy him out.

With Parry so evidently in the Gillett camp and supportive of his attempts to sell to DIC, Hicks resolved weeks ago to remove him from the post he has held for 11 years.

Some sources suggest that Tom Hicks jnr has been informing friends in Liverpool for the past six weeks that his father's camp wants Parry out. But the catalyst seems to have been Tuesday's visit by Gillett to the city centre offices of Liverpool's commercial director Ian Ayre. Gillett, accompanied by Parry, reminded Ayre that he is employed by both, not just Hicks. Ayre, seen as a possible successor to Parry when hired, reportedly assisted Hicks in London last week as he tried to raise cash to help fund a buy-out of Gillett.

As the fracturing of his troubled club went on, Benitez delivered his thoughts on tomorrow's visitors Blackburn – a game vital to his side's ambitions to claim fourth spot ahead of Everton – to a club employee, who posted them on the website. "[Blackburn] are a tough team to play against because physically they are aggressive, they are well organised and it has been difficult against them in the past, but maybe this time it will be different."