Financier Hands' EMI lawsuit versus Citigroup revived

Fri May 31, 2013 2:35pm EDT
 
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By Jonathan Stempel

(Reuters) - A U.S. appeals court has revived British financier Guy Hands' lawsuit accusing Citigroup Inc of defrauding him into overpaying for music company EMI Group Ltd, a disastrous purchase that reflected the risk of buying debt-laden companies during the buyout bubble.

Ordering a new trial, the 2nd U.S. Circuit Court of Appeals in Manhattan threw out a November 2010 jury verdict against Hands' private equity firm, Terra Firma Capital Partners, over its 4 billion pound purchase of EMI in 2007 - now US$6.1 billion.

The court said a new trial was needed because U.S. District Judge Jed Rakoff in Manhattan had instructed jurors improperly on English law, which both sides agreed governed the case.

Citigroup seized EMI in February 2011 and eventually sold it in pieces after Terra Firma had defaulted on some loans and was unable to support EMI's debt load.

Hands initially sought $8 billion in damages, though Rakoff later reduced a potential award to roughly $2 billion.

EMI's catalog of artists has included the Beatles, Pink Floyd, Queen and Tina Turner as well as newer stars like Coldplay, David Guetta and Katy Perry.

BURDEN OF PROOF

Terra Firma won EMI at a May 2007 auction and New York-based Citigroup agreed to provide much of the financing.   Continued...

 
A man enters EMI offices in west London August 18, 2010. REUTERS/Toby Melville