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?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Guru Careers: FX Trader / Risk Manager

Competitive with monthly bonus: Guru Careers: We are seeking an experienced FX...

Guru Careers: Investment Writer / Stock Picker

Competitive (Freelance) : Guru Careers: An Investment Writer / Stock Picker is...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue