Carlyle Prevails Against Liquidators’ Claims Seeking $2 Billion

September 2017

The Carlyle Group was exonerated in a $2 billion action pending in the Royal Court of Guernsey involving the collapse of Carlyle Capital Corporation (CCC), a $23 billion entity sponsored by Carlyle. The company, which invested almost exclusively in guaranteed government-backed securities, became insolvent at the peak of the 2008 financial crisis, igniting lawsuits against Carlyle on three continents.  Claims were filed or threatened to be filed against Carlyle in Guernsey, Kuwait, the Netherlands, Massachusetts, Delaware, Washington D.C., and New York. 

Williams & Connolly was tasked with defending each of these claims in simultaneous actions around the world.  Prior to the judgment in Guernsey, victories were had in every case culminating in favorable decisions in the First Circuit, Third Circuit, D.C. Circuit, and Delaware Supreme Court.  On September 4, 2017, after a six-month trial, the Guernsey trial court found in a 525-page opinion that Carlyle and the directors of CCC acted reasonably and appropriately in the management and governance of the company.  Accordingly, the Court dismissed all 187 individual allegations of breach brought by the liquidation trustees of CCC in the largest case ever tried in Guernsey.

The team representing Carlyle and its directors included Bob Van Kirk, Hack Wiegmann, Sarah Teich, Jessica Richard, Sarah O’Connor, Jonathan Pahl, Yifan Wang, Luke McCloud and Michael Goldsticker.

Reflecting on the significant decision, and what (hopefully) will be the final chapter of this legal maelstrom, Jeffrey Ferguson, General Counsel of Carlyle, noted that:

“We knew these were cases we intended to fight vigorously, and we wanted the best litigation firm we could find to see these cases through to trial, if necessary.  [Bob Van Kirk and Williams & Connolly] met and exceeded our expectations.” 

Ferguson added, “In addition to outstanding litigation advice and judgment in all the individual pieces of litigation that were filed around the world, they also gave us extraordinary strategic advice on the coordination and resolution of the litigation issues as a whole. Between Bob and Sarah Teich, every aspect of every issue was meticulously considered and analyzed, and they developed a plan focused not just on putting out the current fire, but with an eye to the ultimate resolution of these multijurisdictional disputes, deciding precisely when and where to address various issues, and masterfully coordinating our defense in multiple jurisdictions simultaneously.”  

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