PHH collapse: not a one-off

More deals will collapse like PHH and private equity buyers will continue to blame banks, according to counsel.

Blackstone's proposed $1.8 billion acquisition of mortgage and leasing business PHH from General Electric earlier this month. Straight after that announcement, Blackstone released a statement which put the responsibility for the collapse on the banks:

"We regret that the banks are now unwilling to provide financing under the terms they originally agreed," it said.

This controversial statement has filled many columns in the press, but external counsel sympathise with Blackstone.

"During the boom times, the banks marketed to private equity houses by saying that 'we are there for you come hell or high water'. This has been proved to be untrue," said one London-based corporate partner.

"In theory you have a watertight, legally-binding contract, but in the real world the banks will find a way to...