Ogier, Babbé and Collas Crill have been involved in the successful defence of Carlyle Capital Corporation's Non-Executive Directors in the Royal Court of Guernsey.
The claim, for nearly $2bn, was brought by Carlyle Capital’s liquidators against its Directors, Investment Manager and sponsors.
Babbé took the lead role at trial on behalf of the defendants, while Collas Crill's team was led by Corporate Disputes Partner Gareth Bell, Of Counsel David O'Hanlon and Senior Associate Nin Ritchie.
The Carlyle Group, Carlyle Investment Management and TCGH were represented by Ogier's Global Head of Dispute Resolution Simon Davies. Ogier was instructed by Washington DC litigation firm Williams & Connolly.
Victims of financial crisis
Carlyle Capital, part of the Carlyle Group, was a Guernsey-registered fund that invested primarily in high-quality residential mortgage-backed securities (RMBS), which were guaranteed by the US agencies of Fannie Mae and Freddie Mac and thereby implicitly by the US government.
The crisis that engulfed the world's financial markets in 2007 and 2008 resulted in Carlyle Capital being placed into liquidation in March 2008.
The liquidators later commenced proceedings in the Royal Court (and courts in the US) against its Directors, Investment Manager and Carlyle Group entities seeking to lay the blame of the fund's demise at their door.
The principal premise of the liquidators was that the Directors knew, or ought to have known, that the collapse of Carlyle Capital was unavoidable and imminent as early as the end of July 2007, and should have pursued an alternative business strategy that included selling off swathes of its RMBS assets.
The liquidators claimed that since the Directors failed to take the steps the liquidators alleged were necessary, the Directors breached their duties to the company and ought to be liable for the alleged losses, which by trial were nearing $2bn.
Guernsey first
This is the first time a Guernsey Court has been required to provide guidance in respect of the duties of Directors and numerous other related issues.
After a six-month trial during which the Court heard 14 factual witnesses and 16 expert witnesses, and considered 107 files of evidence, Lieutenant Bailiff Hazel Marshall QC's judgment vindicated the actions of the defendants.
He found that they had acted honestly, loyally and with reasonable skill and care and that the liquidators had not shown that their postulated alternate strategy would have saved Carlyle Capital. All of the liquidators' claims advanced at trial were dismissed.