A Gramercy Funds Management-backed law firm was unlawfully fired from a $36 billion lawsuit that has seen two private credit investors clash over who will represent hundreds of thousands of victims of a dam collapse in Brazil.
PGMBM Law, formerly called Pogust Goodhead, sued BHP Group Ltd and Vale SA in the UK on behalf of more than 600,000 Brazilians affected by the 2015 Fundão dam collapse. North Wall Capital is financing the rival team seeking to replace PGMBM.
A committee tasked with managing the litigation agreement with PGMBM did not have the power to terminate the contract, a London judge ruled on Monday. The termination could have exposed more than 400,000 Brazilians to hefty costs for the money spent on litigation so far, the judge said.
The tussle over control of the high-stakes litigation emerged after BHP was found liable last year and must compensate victims. Another trial next year will decide the amount of money BHP will pay in compensation.
PGMBM challenged the client committee’s decision last month to replace it with little-known law firm Edward McCourt & Company. North Wall Capital is behind Edward McCourt, which is staffed by a number of former Pogust Goodhead partners and is working closely with US firm Bailey Glasser International.
“We will be analyzing the judgment in depth before deciding on our next steps,” a spokesperson for the committee said. “As has always been the case, any decision will be made in the best interests of all claimants.”
Private Credit Investors Clash Over £36 Billion BHP Dam Lawsuit
Since claiming victory over the mining firms in court, the relationship between former Pogust Goodhead’s boss, Thomas Goodhead, and the firm’s funder Gramercy has soured. Gramercy alleged Goodhead had abused his expense account and spent lavishly on hotels and private planes — an allegation Thomas Goodhead denies.
Last month Thomas Goodhead revealed that he was working with Edward McCourt & Company in its bid to wrestle control.
“The committee did not have the power to terminate the agreement by exercising the powers of individual clients on their behalf,” Judge David Waksman said in the ruling.