EMI’s owners, private equity company Terra Forma, have been dealt a blow in their court case against Citibank, in which they were arguing that they had been tricked in to paying too much for the company. The judge hearing the case has disallowed Terra Firma’s claim for damages based on a legal argument of ‘lost profit’. The case is getting quite complicated, but that’s what happens when there’s a lot of money at stake.
Terra Firma had been claiming up to $11 billion in damages from Citigroup, submitting a report from a forensic accountant which claimed that the company had lost potential profits of $6 billion, in addition to the $5 billion it paid, as a result of buying EMI. Sounds complicated? It is, but in essence if Terra Firma loses this court case against CitiGroup, the bank – which funded Terra Firma to buy EMI – will foreclose on its loan and break EMI up, selling off the different parts of the once mighty company to recover its debts.
