Hands wins battle over Four Seasons care home blunder

THE private equity tycoon Guy Hands has come out on top in a £136m court battle with the US hedge fund lender to his troubled care homes operator Four Seasons, after a blunder by a top City law firm threatened to further increase his losses on the disastrous buyout.

The High Court found that a lucrative group of 24 care homes acquired later by Mr Hands in a separate deal was mistakenly pledged to Four Seasons’ lenders, who are led by the hedge fund H/2 Capital.

Mr Justice Carr ruled that a “serious error” in 2016 by Allen & Overy (A&O) meant the homes were included in bond security documents that should be torn up and rewritten to exclude them. The homes trade in the private sector only as Brighterkind and are managed by Four Seasons.

The victory for Mr Hands and his private equity firm Terra Firma removes one element of uncertainty in separate talks to hand control of Four Seasons to H/2. The hedge fund bought up most of the operator’s £525m bond debt at a discount as pressure on public funding for care wiped out all of Terra Firma’s original equity investment.

Mr Hands has already booked a £450m loss on the 2012 acquisition and faced further potential embarrassment if the Brighterkind homes had been lost too.

He has been attempting to raise funding following his last High Court appearance, a failed attempt to sue bankers who advised on Terra Firma’s calamitous debt-fuelled takeover of record label EMI. A spokesman said it was pleased that the court found that in the Four Seasons case all parties “knew and understood … the fact that the security ... was a mistake”.

The decision is also a relief to A&O, which could have faced a compensation claim from Terra Firma. It declined to comment on the ruling. H/2 Capital had no immediate comment.