By Robert Plummer
Business reporter, BBC News
Time is running out for billionaire Guy Hands as he struggles to keep control of troubled record company EMI.
EMI could be taken over by Citigroup in less than three months
His private equity vehicle Terra Firma bought the UK's last big music firm at the height of the market boom in 2007, before the credit crunch hit.
On his own admission, he paid too much for the company and has been regretting it ever since.
The £4bn ($6bn) deal left him in hock to banking giant Citigroup - and now the financiers are breathing down his neck.
The deadline day is 14 June. Terra Firma needs to come up with about £120m by then in order to abide by banking covenants.
If Mr Hands fails to come up with the cash, Citigroup will be entitled to take over EMI and put it up for sale, probably to rival Warner Music.
In desperation, Mr Hands has been floating all manner of possible solutions.
Ideas such as splitting EMI into two and even selling off assets such as the world-renowned Abbey Road studios have been mooted.
But his best hope was to lease the North American rights to EMI's back catalogue to another of the Big Four major labels, with Sony Music and Universal both named as potential partners.
As music industry sources said, it was not so much selling off the crown jewels as taking them to the pawnbroker's for a while.
But that hope has now collapsed. The price was a major sticking point, while executives at both firms were apparently interested in licensing EMI's tracks for a far longer period than the five years envisaged by Mr Hands.
The only remaining chance to placate Citigroup before mid-June is for Terra Firma to raise the cash from investors.
Even before their impending showdown, relations had soured between Terra Firma and Citigroup.
Mr Hands wants Citigroup to take a share of the blame for the high price he paid for EMI back in 2007.
He argues that Citigroup increased the cost of the deal by not telling him that a rival bidder had pulled out - and he is taking legal action against the bank on that basis.
Guy Hands has contemplated selling Abbey Road
"Because of Citigroup's misrepresentations, Terra Firma paid a fraudulently inflated price," according to the claim, filed in a New York court.
Citigroup not only denies the allegation, but also contests the right of US courts to hear the case at all.
However, its effort to have proceedings moved to London was dismissed by a New York judge.
The case now looks set to go ahead in the US in October - much to the relief of Mr Hands, who moved to Guernsey last year as a tax exile and was keen to avoid spending time in the UK.
For art's sake?
Unfortunately, EMI has been in the news so much for its money problems lately that its function as a creative organisation is getting overlooked.
Even its relationship with its artists is now defined primarily in legal and financial terms.
Guy Hands is increasingly beleaguered
A recent High Court ruling in a royalties dispute with Pink Floyd portrayed the company as caring little for the artistic integrity of the band's work, slicing up carefully-crafted concept albums into individual digital downloads.
It might have been a false impression, but it has paved the way for further legal actions.
The latest lawsuit against EMI, brought by US firm Bluewater Music Services, seems to centre on royalty payments for Doobie Brothers ringtones - a sure sign that commerce has gained the upper hand over art.
These days, a new signing to EMI doesn't mean a hot up-and-coming band, but an addition to the management team, as shown by the announcement that former ITV boss Charles Allen is taking over as executive chairman.
Elsewhere in the music industry, senior figures talk of EMI as having "more to do with private equity than creativity".
However, EMI rightly stresses that it has much to be proud of creatively, with artists such as Gorillaz and hot new US act Lady Antebellum currently scaling the charts.
"Operationally, EMI is performing very strongly, with rising sales and rising market share," said a spokesman. "The only issue is the amount of debt owed to Citigroup and the onerous covenants imposed by the bank.
"All this is about the balance sheet, not the artists and the music, which are doing very well."
Cost of talent
But do EMI's woes matter in this age of digital delivery? Surely artists can reach audiences directly through the internet nowadays without signing to a major label?
Well, it's not that easy. At least, that's the view of the music industry's global body, the IFPI (International Federation of the Phonographic Industry).
In its most recent report, Investing In Music, the IFPI argues that it takes $1m to break a new act in the biggest markets and that the music business as a whole invests $5bn a year in artists worldwide.
If you don't have that kind of money behind you, it seems, you will never become a household name.
Yet if EMI is busy mortgaging its past to stave off creditors, what cash does it have left for promoting new talent?
Guy Hands will think himself fortunate if he manages to win his struggle with Citigroup and preserve EMI's independence.
But in the longer term, he is doing little to make the company look like an attractive home for the would-be stars of tomorrow.