There are two central questions in both cases. One is how the former Hellas board, made up mostly of representatives from the private equity firms, came up with the high valuation for the certificates redeemed in 2006; the other is whether the redemption met the terms of the certificates and abided by Luxembourg law.

Image Hellas Telecommunications, once Greece’s third-largest mobile phone operator, was taken over in 2005 by two giant private equity outfits. Credit... Yannis Kontos/Bloomberg News

Under their terms, the certificates can distribute profits generated by the company or proceeds from an asset sale; in addition, before any distribution was made, the company had to secure an independent valuation of its equity. Finally, the distribution had to comply with Luxembourg law, which says that payouts cannot be made to shareholders in the absence of distributable earnings at the company.

None of these requirements were met, the creditors contend.

The fraudulent transfer suit is being heard by Martin Glenn, a judge in Federal Bankruptcy Court in New York, under Chapter 15 of the bankruptcy code, which involves cross-border insolvencies. Apax and TPG have fought hard to keep the case from going forward, but on Aug. 19, the judge ruled that the plaintiffs could file a new complaint, allowing the case to proceed.

To make his ruling, Judge Glenn had to determine whether the plaintiff’s allegations had given rise to a so-called strong inference that fraud may have occurred.

He referred to emails and other material presented by the plaintiffs indicating that the private equity firms knew their decisions were jeopardizing Hellas’s financial position.

For example, a Dec. 2, 2006, email from a TPG executive to a colleague at Apax noted that the firms were “putting the business under huge pressure” to take their money out in the redemption. Another email about two weeks later from a TPG executive to James Coulter, a co-founder of the firm, warned of the precarious position Hellas would be in if the 2006 redemption took place.