Freshfields hit with £142m London Underground negligence claim
Freshfields Bruckhaus Deringer has been hit with a £141.96m negligence claim relating to advice it gave London Underground Ltd (LUL) in 2002. The claim was issued by LUL in the High Court in January this year and relates to advice the magic circle firm gave the company on its 2003 public-private partnership (PPP) with collapsed transport company Metronet.
July 25, 2011 at 06:42 AM
2 minute read
Freshfields Bruckhaus Deringer has been hit with a £141.96m negligence claim relating to advice it gave London Underground Ltd (LUL) in 2002.
The claim was issued by LUL in the High Court in January this year and relates to advice the magic circle firm gave the company on its 2003 public-private partnership (PPP) with collapsed transport company Metronet.
LUL argues that Freshfields' advice on contracts drawn up in 2002 meant that following Metronet's administration in 2007 it had to pay out more in associated 'breakage' costs than it should have.
Mayer Brown London senior partner Sean Connolly has been instructed to advise Freshfields alongside One Essex Court's Laurence Rabinowitz QC.
Meanwhile Ince & Co insurance litigation partner Andrew Ottley is advising for LUL, with Brick Court Chamber's George Leggatt QC.
A TfL spokesperson "London Underground has filed a claim against Freshfields over the legal advice it gave regarding Metronet's borrowings under the PPP. As this is going through the legal process we can make no further comment at this time."
A spokesperson for Freshfields said: "We totally reject the claim and we'll be defending it vigorously."
Freshfields advised LUL on matters relating to the PPP between 1998 and 2003 with finance partners Richard Phillips and Jeffrey Rubinoff at the helm for the firm, which made £27m from the mandate during this period.
LUL's PPP with Metronet launched in 2003, with the deal leaving the operational running of the tube system to LUL, while handing over control of the tube lines to infrastructure groups tied to Metronet.
Metronet then went into administration in 2007 with the contracts drawn up as part of the agreement meaning LUL had to purchase some of its debt to re-pay investors.
Allen & Overy was appointed to advise Metronet's administrator Ernst & Young in 2007, with the deal then marking the largest formal insolvency procedure and the first ever PPP project to become insolvent.
A court hearing is not expected until 2012 at the earliest.
Click here to read more about Metronet's restructuring.
- For more on the Metronet PPP, click here
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