Liverpool buyer went bankrupt in the US

George Gillett Jnr, the prospective owner of Liverpool, has a spectacular bankruptcy on his CV, which involved the collapse of his business empire in 1992 with debts of $1bn (£508m), and led to a personal bankruptcy to the tune of $66.2m, The Independent can reveal.

Gillett, 68, said at the time that he had "caused the problem" that led to the downfall of his Gillett Holdings firm, because of an " error in judgement and timing" about a major investment, in that case in a Florida television station.

But sources close to Gillett, who is now in pole position to take over at Anfield, perhaps within days following Wednesday's shock withdrawal of Dubai International Capital's firm pledge of £450m investment, insist the entrepreneur is the right man to take Liverpool forward.

Reports in America yesterday suggested Gillett may buy Liverpool with Tom Hicks, the Dallas businessman who owns the Texas Rangers baseball franchise.

"Gillett is a serious investor with a good track record," a source in his camp said. Since his 1990s downfall, the American has rebuilt his empire and is estimated to have a personal fortune of £440m.

Gillett has not made public how he intends to pay for his proposed £170m buyout, write off debts of £80m, pay for a £200m new stadium or fund transfers. "But if you're asking whether this a majorly debt-driven venture, then no," the source claimed. "It is not a Glazer-type deal."

The Glazer family borrowed heavily to buy Manchester United and have since heaped £660m of debt liability directly on to United's books.

Without providing any details or breakdown, the Gillett source said Gillett had given written assurances to the Liverpool board that he would indeed pay for the new stadium, and provide funds for the future.

He will also, crucially, offer the shareholders, including the chairman David Moores (a 51.6 per cent stakeholder), £5,000 per share against DIC's £4,500.

Gillett has hired the bankers Rothschild to handle his offer. A banking source said last night: "There's less stigma attached to bankruptcy in America. Chapter 11 [protective bankruptcy proceedings, which Gillett went through] are viewed as a normal route out for business collapses."

Liverpool fans may take some persuading, especially as DIC seemed to have produced an attractive offer that guaranteed a stadium and hefty transfer funds. DIC pulled out after learning that what it thought were " exclusive" negotiations with Liverpool had been widened to allow the Gillett offer to be heard.

Liverpool's chief executive, Rick Parry, who on 14 January was singing DIC's praises and saying he was "confident" that that deal was imminent, sought yesterday to calm supporters' fears. "The overriding message is, 'Don't worry'," he said. "Whatever decision is finally taken will be done so in the best interests of Liverpool Football Club... We had a duty as directors to consider a very interesting bid from George Gillett."

It is not known how much Liverpool know about Gillett's previous business failure, nor whether they consider it relevant. Gillett's only other sports interest is as owner of the NHL's Montreal Canadiens.

Gillett's career started in management consultancy in his twenties, and he made his original fortune through meat production, sports franchises, ski resorts and television media. It was during this period, up to the 1980s, that he had ­ and then sold ­ interests in the NFL's Miami Dolphins and in the Harlem Globetrotters.

His errors were borrowing too much money (via high-risk "junk bonds") to sustain his companies, and then investing badly. The final straw, as Gillett saw it, was buying WTVT-TV in Tampa, Florida, for $385m, just as the industry went into recession. By 1989, Gillett Holdings had lost $100m on WTVT-TV alone. Things came to a head in 1991 when the junk bond interest shot up, and as Gillett said: "When the notes came due, we were dead."

Gillett's empire was bust, and he was also declared personally bankrupt, losing his home and sports cars.

He did, however, remain on the payroll of one of his ski firms, and was allowed to keep millions of dollars in a settlement package that saw his various interests emerge from bankruptcy under new owners unrelated to him. From scratch, he built a new empire in meat, sport and car dealerships.

Talking to Time magazine in 1997 about his riches-to-rags-to-riches experience, he said of his personal bankruptcy and loss of his house: " I had 10 days to get out... I [later] had to buy back my clothes. I had to buy back my dogs." He also admitted he sometimes moved too fast in business, and bought too much. "I've lived my dreams, but then I blow them up."