On April 12, 2019, the Court of Appeal of Guernsey upheld the trial court’s judgment fully exonerating the former directors and managers of Carlyle Capital Corporation (CCC), a $23 billion entity sponsored by The Carlyle Group that went bankrupt during the 2008 financial crisis. The appellate judgment is the final word from the Guernsey courts on sprawling litigation that was filed in 2010 by CCC’s liquidators. Robbins Russell has represented CCC’s former independent directors successfully throughout the precedent-setting Guernsey litigation, and in separate lawsuits filed in multiple U.S. jurisdictions, all of which have been dismissed.
The Court of Appeal’s decision affirms the judgment of the Guernsey trial court, which was issued in 2017 after a six-month trial. Like the trial court, the Court of Appeal rejected all allegations that the directors or managers breached their duties to CCC. As the Court of Appeal held, CCC’s “failure was the result of circumstances beyond the control of any board of directors.” The Court of Appeal agreed that the directors exercised reasonable business judgment in the face of uncertain financial conditions and that the liquidators’ lawsuit was driven by hindsight. The recent Court of Appeal judgment is the latest success in the defense of the $2 billion lawsuit and gives The Carlyle Group and its directors the right to recoup legal fees as the prevailing parties in both levels of the Guernsey courts.
Robbins Russell partners Gary Orseck, Alison Barnes, and William Trunk led the engagement. Their work involved all aspects of the litigation, including pretrial matters, extensive work with expert and factual witnesses, participation in the Guernsey trial, and representation of the independent directors on appeal.