Magnusson to sue Hammers

Magnusson: Suing West Ham

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Former West Ham chairman Eggert Magnusson has sued the club and its owner Bjorgolfur Gudmundsson for breach of contract, according to reports in Iceland.

Magnusson is demanding 200 million Icelandic crowns (£1.2million) for an alleged violation of his severance settlement after registering the case at Reykjavik Municipal Court on Thursday.

Magnusson became chairman of West Ham in 2006 after Gudmundsson bought the majority shareholding in the club.

Gudmundsson dismissed Magnusson from his post in September 2007 and the two concluded a severance settlement in which Gudmundsson bought Magnusson's West Ham stake, which was held by a company in Luxembourg.

According to court papers, Gudmundsson had also agreed that he and the club would pay Magnusson €1million (£936,000) and £200,000 in two equal instalments - the equivalent of three months' full salary following the dismissal.

However, these payments had not been made apart from £100,000 paid to Magnusson by Gudmundsson in February this year.

Gudmundsson would not comment on the case when he was asked about the issue by Icelandic television.

Trouble

Gudmundsson, who led an £85million buyout of West Ham two years ago, has emerged as a high-profile victim of the global financial crisis.

Hansa, the holding company through which Gudmundsson owns West Ham, is technically bankrupt, with the company given until on March 6 to sort out its finances.

The tycoon and his family were major shareholders in Icelandic bank Landsbanki, which the Icelandic government seized in October following the near collapse of the country's financial system.

On Wednesday, West Ham vice president Asgeir Fridgeirsson confirmed confidentiality agreements had been signed with several potential buyers of the club.