In a ruling that’s a blow to one of the remaining four major label groups, private equity group Terra Firma has lost its court case against Citigroup accusing the bank of tricking them into overpaying for label group EMI in 2007. Terra Firma’s owner Guy Hands paid $4 billion for the company, with Citigroup providing $4.2 billion in loans, which EMI has struggled to pay since. Hands had claimed the Citigroup told him there were multiple bidders for EMI (which includes Capitol and Virgin, among other labels), which forced him to raise his bid on the company. Terra Firma filed suit against them for fraud in 2009. It took jurors only two days to dismiss three of the four counts, claiming there wasn’t enough evidence.

So what’s next for Terra Firma? Well, their debt has ballooned up to $5.2 billion since their acquisition due to changes in the exchange rate. According to Billboard.biz, they’ll need another injection of equity before the end of their fiscal year. Citigroup might be able to take over Terra Firma and EMI if they’re not able to make payments. For Terra Firma, they’ll succeed if the economy rebounds enough for them to refinance some of their debt or EMI acts have some major hits. They also might sell off some of their EMI assets to reduce the debt they owe. Either way, it will be interesting to see what happens next.