Legal Top Stories

Terra Firma v Citigroup: ruling on dismissal application this week

By | Published on Monday 13 September 2010

We should all know by end of play Wednesday – New York time – whether the much previously reported legal squabble between EMI owners Terra Firma and their bankers Citigroup over the latter’s role in the former’s acquisition of the flagging music major will go to court. I do hope so, it has the potential to be a whole load more entertaining than most of the London-based music firm’s other output so far this year.

As previously reported, Terra Firma say that Citigroup misadvised them back in 2007 as they planned their audacious takeover of EMI. Had the Citi-boys done their job, Terra Firma top groover Gary ‘The Guy’ Hands argues, he would not have bought the music company, or certainly not at the price he paid for it.

Although both EMI’s publishing and recordings divisions have seen some growth since 2007, both are majorly hindered by the multi-billion pound debt to Citibank the Terra Firma takeover landed the music firm with. Covenants relating to that debt have also required Terra Firma to make repeated cash injections into EMI, a fact that has not been met with complete glee by some of their financial backers.

Hands tried to restructure EMI’s bank loan with Citigroup last year, but the US bank refused to play ball. The Terra Firma lawsuit quickly followed. As also previously reported, as lacklustre efforts to get an out of court settlement collapsed last week, Citigroup called on the New York judge hearing the case to dismiss it before a full hearing could even take place.

We will now know whether that application for dismissal by the bankers has been successful within the week. Judge Jed Rakoff, overseeing he case, heard two hours of oral arguments on the application on Friday, after which he said: “I will give you a bottom line ruling by next Wednesday”.

Assuming Rakoff does not dismiss the case this week, the whole thing is due in court proper on 18 Oct. I’m thinking of buying a special hat.