A U.S. judge said he would rule by the end of March on whether or not to grant a request by Citigroup Inc to move a lawsuit by Terra Firma Capital Partners Ltd to London in a dispute over the buyout house's acquisition of EMI.

Terra Firma chairman and chief executive Guy Hands has become embroiled in an increasingly bitter legal dispute with the U.S. bank, which advised on and provided financing for Terra Firma's 4 billion pound ($6.3 billion) acquisition of EMI Group PLC in 2007.

"I think the parties deserve to have a quick resolution but on the other hand this is not an obvious slam dunk decision," U.S. District Court Judge Jed Rakoff said after hearing oral arguments on Thursday (March 4). "I guarantee a decision by the end of this month and the full opinion at a later point."

Terra Firma lodged a claim in Manhattan federal court in New York last year, accusing Citigroup of inflating the price of EMI by not revealing that the only remaining bidder, Cerberus Capital Management, had withdrawn from the auction.
The deal at the height of the buyout bubble has come to epitomize the worst aspects of private equity dealmaking, with a high debt burden and a weak performance crippling the business.

Citigroup argued in a motion to dismiss the case that the litigation should be heard in London because all the parties to the agreement were there.

Terra Firma asked the U.S. court to hear the case over its troubled deal for EMI, rather than shift the proceedings to London, a move it said could jeopardize the tax status of Hands, the firm's founder. In his own court declaration, Hands said he has no intention of setting foot in Britain for at least two years, having left last April for tax reasons to live in Guernsey in the Channel Islands.

The music industry, and the recorded music division in particular, has been severely hit in recent years by mass illegal downloading and the move away from album sales to single digital tracks.

EMI posted a £1.56 billion ($2.4 billion) full-year loss in February and warned of a likely significant shortfall when its banking covenants are tested at the end of March.

Terra Firma has already written to investors telling them it may need to invest about £100 million ($150.5 million) to keep the company within the terms of its £2.6 billion ($3.9 billion) debt.

Plans to sell the Abbey Road studios, immortalized by the Beatles album of the same name, provoked a huge public reaction. EMI later rejected an offer of £30 million ($45.2 million) and said it wanted to retain control of the studios.

The case is Terra Firma Investments v Citigroup, U.S. District Court for the Southern District of New York, No. 09-10459.