Citi hits back as Hands tries to block trial move

Terra Firma founder argues that his case against bank should be held in New York not London

The epic legal battle over beleaguered music company EMI is set to intensify this week as US investment bank Citigroup counters the arguments of private equity tycoon Guy Hands.

Mr Hands, who bought EMI for £4.2bn in 2007 through his Terra Firma vehicle, is suing Citi for damages over the deal. He alleges that Citi, which lent Terra Firma £2.5bn to complete the deal, misled him into thinking there were other bidders, so he ended up paying too high a price to trump competition.

Citi denies the allegations and is trying to get Mr Hands's case tried in London, where the bulk of the transaction took place. Terra Firma wants the case to be held in New York because that is where Citi is based.

Mr Hands also opposes the move as he would be a key witness and have to testify, but does not enter the UK as he legally avoids high rates of tax by living in Guernsey.

Terra Firma presented its case last week for holding the battle in New York. If successful, a full trial will take place in the US this October.

Terra Firma presented declarations from several potential witnesses. Mr Hands said: "Appearing at trial in the United Kingdom and spending continuous time there managing this litigation, therefore, is a risk I strongly prefer not to take, and it does not exist if the case is tried in New York."

Inga Van Eysden, the chief of the pensions division of the New York City Law Department, argued that four of the partners in Terra Firma are based in the Big Apple and therefore needed to be close to the court.

"Because of the significant economic stake of the New York City Pension Funds in the outcome of this litigation, it is my preference, in my official capacity, that the claims in this action should be litigated in the federal New York forum in which the action is currently pending," said Ms Van Eysden.

Citi has until Thursday to make its arguments for transferring the case to Britain and a judge will make a final decision on jurisdiction at 4pm, on 19 February. Citi is formulating its response this weekend, but will certainly stick to its original argument even in light of Terra Firma's arguments.

EMI, which owns hits by big name artists such as the The Beatles and David Bowie, lost £1.8bn last year and has a £200m pension fund deficit.

Separate to the court action, Mr Hands is trying to raise £120m to stop Citi taking control of the business in what would, in effect, be a debt-for-equity swap. Maltby Capital, the Terra Firma vehicle that formally owns EMI, is likely to fail tests on its loan conditions, according to auditor KPMG.

Mr Hands said in 2008 that cost savings would result in EMI "creating wonderful music in a way that is profitable and sustainable".

Mr Hands is a close friend of William Hague, the shadow foreign secretary and former Conservative Party leader, whom he met at Oxford University. Mr Hague was best man at his wedding.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones