Back in the summer of 2007, Apollo Management LP struck a typical private equity buyout. The deal called for paying $6.5 billion for Huntsman (NYSE: HUN), a chemicals company. In fact, the deal provided lots of synergy since Apollo already controlled a variety of similar businesses (through an entity called Hexion).

Well, of course, this was the peak of the private equity boom – and the credit markets began to unwind fairly quickly. What's more, the fundamentals of Huntsman started to weaken.

As a result, Apollo tried to extricate itself from the deal. And this meant a tough litigation fight.

Of course, this can be pretty a dicey thing. That is, the Delaware court ruled against Apollo and there was an order to get the deal done.

Yet again, this was bad news for Apollo (which has other faltering deals, such as Linens 'N Things). Actually, some of the top private equity firms have been taking some major hits lately, such as the TPG Group with its Washington Mutual (NYSE: WM) disaster.

So, to deal with the court ruling, Apollo has agreed to pony up $540 million to close the Huntsman transaction. Interestingly enough, Apollo has also agreed to give up its lucrative fees (amounting to $100 million or so).

This means that Huntsman should be on firm footing (especially in terms of its solvency). And, something else: the banks on the deal – which include Credit Suisse and Deutsche Bank – will have to raise the necessary funding, which will likely mean losing several billion on the transaction.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website