Weil Gotshal secures victory for Barclay brothers in hotel case

Weil Gotshal & Manges and Quinn Emanuel Urquhart & Sullivan have successfully seen off allegations of dishonesty against their clients in a case related to the Barclay brothers’ acquisition of the Maybourne Hotel Group.


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Judgment was handed down this morning by Mr Justice David Richards in the high profile case, which centres on a dispute over the ownership of London hotels Claridge’s, the Connaught and the Berkeley.

Shareholder and Irish property tycoon Paddy McKillen, represented by Herbert Smith partners John Whiteoak and Kevin Lloyd, was suing Sir David and Sir Frederick Barclay, their companies and some nominee directors, alleging that they tried to bypass his right to buy more shares to prevent him from gaining control of the company.

The Barclay brothers were represented by Weil litigation practice head Matthew Shankland, with Hannah Field-Lowes, Jamie Maples, Victoria Burton and Kate Russell assisting.

The leader of an investment group that bought the hotels in 2004, Derek Quinlan, represented by Quinn Emanuel partners Richard East and Matthew Bunting, was also accused of being involved in the conspiracy. It was Quinlan’s shares that McKillen had sought to buy.

McKillen was seeking to block the £600m transaction by alleging it was unlawful.

But with almost a dozen defendants represented by the City’s top litigation practices and entire top ranks of chambers, McKillen now faces an estimated minimum £20m costs bill.

Although he is likely to appeal the decision in September, lawyers close to the case believe this is a long shot as Richards’ ruling is comprehensive in its finding of fact against McKillen.

Richards J said: “Mr McKillen’s case amounts to an allegation of outright and sustained dishonesty on the part of Sir David Barclay, Mr Quinlan [and others]. I do not consider that the evidence comes anywhere near establishing so serious an allegation.”

Weil private equity partner Marco Compagnoni had advised the Barclay brothers on the various transactions that formed the basis of McKillen’s unsuccessful challenges.

Today’s ruling followed two earlier Court of Appeal decisions in favour of the Barclays on preliminary issues (29 June 2012).

Shankland said the judgment was a “comprehensive defeat” for McKillen and Herbert Smith, which was criticised by Richards J during a the trial for taking a “lackadaisical” approach to a disclosure exercise (14 March 2012).

He added: “This judgment is a comprehensive win for our clients. It comes after a 30-day trial and Mr Justice David Richards has produced a most impressive and carefully considered ruling. This has been one of the most significant and complex cases in the High Court this year, and certainly one of the most high profile.”

The parties

For the claimant/petitioner Patrick McKillen: Serle Court’s Philip Marshall QC, 4 Stone Buildings’ Richard Hill QC and Gregory Denton-Cox, also of 4 Stone Buildings, with Serle Court’s Ruth den Besten, instructed by Herbert Smith partners John Whiteoak and Kevin Lloyd.

For the respondent Derek Quinlan: One Essex Court’s Stephen Auld QC, Michael Fealy and Michael d’Arcy instructed by Quinn Emanuel Urquhart & Sullivan partners Richard East and Matthew Bunting.

For the respondents Misland (Cyprus) Investments; Ellerman Corporation; B Overseas; and Maybourne Finance: One Essex Court’s Kenneth MacLean QC, Edmund Norse, Sa’ad Hossain and Emma Jones instructed by Weil Gotshal & Manges partner Matthew Shankland.

For the respondents, directors Richard Faber, Michael Seal and Rigel Mowatt: Essex Court’s Joe Smouha QC and Erskine Chambers’ Edward Davies instructed by Ashurst partner Ed Sparrow.

For the defendants Sir David and Sir Frederick Barclay: One Essex Court’s Lord Grabiner QC, Edmund Nourse of the same set instructed by Weil Gotshal & Manges partner Matthew Shankland.

For National Asset Loan Management: South Square’s Robin Dicker QC and William Willson instructed by Hogan Lovells’ litigation partner Hugh Lyons.

For Coroin: Erskine Chambers’ Nigel Dougherty instructed by DLA Piper partner Charles Gordon.