A senior English silk and Collyer-Bristow have been replaced in the largest insolvency action of recent times, for which prehearings are due to start today (24 November).
The trial, set down for January 2004 in the Bahamas, involves claims by shareholders HSBC and a UBS subsidiary against Fortis Fund Services, the managers of a $250m (£147.2m) fund, Oracle, and some of its directors.
The claimants allege misrepresentation as well as mismanagement of the fund.
The trial is set to run for 12 weeks. Insiders at magic circle chambers say it is the longest case on their books.
The directors were originally instructing Collyer-Bristow, which declined to comment, while Fortis was instructing Richards Butler. Collyer-Bristow has now gone off-record and been replaced by Richards Butler, which is now representing all of the defendants in the UK. Richards Butler litigation partner John Hull, who also declined to comment, is leading the defendants’ action.
One source said it is a common tactic, in cases where defendants include a company and directors, to use two firms until the case comes close to trial. Then one of the firms goes off-record while the original two silks continue to be instructed. Having two silks at trial, although expensive, provides the defendants with ‘two bites of the cherry’ and a general advantage over the single silk employed by a claimant.
Robin Potts QC of Erskine Chambers, a highly respected insolvency and company barrister, has been replaced by Mark Hapgood QC of Brick Court, for Fortis. Barbara Dohmann QC of Blackstone Chambers is acting for the directors.
A key action has already been fought between the shareholders, which have been divided into two groups: group A, which is represented by the UBS subsidiary, which is instructing Bahamian firm Lennox Paton and, in England, a team led by Noel Campbell of Holman Fenwick & Willan, which is instructing Robert Hildyard QC; and group B, which is represented by HSBC, instructing Bahamian firm Mckinney Bancroft & Hughes, and in England Barlow Lyde & Gilbert, and supported by Robin Knowles QC of 3/4 South Square.
At first instance, a Bahamian court ruled that group B, led by HSBC, would get priority over repayment of the funds from the liquidation. This was reversed at appeal after group A argued for equal treatment. Group B has applied to the Bahamian court of appeal for leave to appeal to the Privy Council.
In the substantive action against Fortis and the directors, HSBC is instructing Barlow Lyde & Gilbert, which in turn is using Fountain Court’s Michael Brindle QC and Guy Philipps QC as counsel. 3 Verulam Buildings has juniors acting for both defendants and for the UBS subsidiary.
A claim brought by Ernst & Young against Fortis settled out of court in January.