The bone of contention? Not unpredictably, a credit flap. A close examination of one case that underscores just how much the relationships between buyout firms and their lenders have soured of late. And why court is, repeatedly, the one and only place that seems fit to do anything about it.

UBS AG sued a joint venture of British financier Guy Hands and Deutsche Bank AG for refusing to allow the Swiss lender to sell its buyout debt to new investors.

Autobahn Tank & Rast Holding GmbH, the German highway services chain owned by Hands's Terra Firma Capital Partners Ltd. and Deutsche's RREEF fund, blocked the sale of debt to new lenders for "invalid and illegitimate reasons," UBS said in a complaint filed with London's High Court on May 14. The Zurich- based bank is seeking damages from Tank & Rast for breach of contract and an injunction to stop it withholding consent to transfer the debt without a legitimate reason.

"The claimant threatens and intends to continue to refuse to grant its consent to any future assignments, transfers or sub-participations to new lenders," UBS said in the court filing.

The dispute highlights a souring of relations between buyout firms and their lenders as banks attempt to reduce a backlog of unsold LBO loans that peaked at $350 billion last year and contributed to Wall Street's losses. Hands, 48, who likened bankers to whimpering dogs after credit markets slumped last year, has also saddled Citigroup Inc. with 2.5 billion pounds ($4.9 billion) of debt used for his buyout of EMI Group Ltd., the record label of the Beatles.

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