Andy Burnham faces legal nightmare as Thames Water investors threaten to sue if he nationalises the crisis-hit supplier

ANDY Burnham is facing the threat of a multibillion pound legal battle with Thames Water’s investors if he pushes ahead with plans to nationalise the crisis-hit water giant. The group of investors trying to rescue Thames Water have hired top law firm Pallas Partners to plan a legal fight against the government, according to Sky News. Pallas Partners, which calls itself an “elite litigation and disputes firm”, is working alongside Akin Gump, which is already advising the consortium on its rescue plans. The consortium, known as London & Valley Water, is made up of major fund managers including Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital. Sign up for the Money newsletter Thank you! Together they hold £17billion of Thames Water’s £21billion debt mountain and have been negotiating a £10billion deal to take control of the company. That deal is aimed at stopping Thames Water being placed into a special administration regime, which would effectively mean temporary public ownership. However, fears have grown among investors since Sir Keir Starmer‘s departure as Prime Minister and his replacement by Andy Burnham this week. Burnham has previously said he wants to see “public control” of water companies, telling reporters last month that for Thames Water “that is what should be done”. City sources say Pallas Partners has been drafted in to work on a litigation strategy that could challenge nationalisation or special administration on several legal grounds. One banker who has worked with the funds told Sky News: “They are prepared to litigate for years if necessary.” Most read in Money A person close to the consortium insisted legal action was “a last resort”, adding: “There is no legal action being taken right now. This is purely precautionary.” Under the current rescue terms, the investors would inject £3.35billion of new equity and £6.25billion of fresh debt, while writing off £9.6billion of Thames Water’s existing debt. Comment now