About a year, after Deutsche Bank filed a lawsuit against Finepoint Capital on Lehman Brothers’ bankruptcy, the case is closed.
Earlier this week, Judge John P Cronan of the New York Southern District Court signed an order rejecting the case.
The defendants had provided Deutsche Bank with documentation on the citizenship of their members. Deutsche’s complaint does not sufficiently claim the nationality of Finepoint Capital LP, Warbler Run I, LLC, Warbler Run II, LLC. For each of these entities, Deutsche Bank simply claimed the state of formation and the position of the main place of business.
However, the nationality of an unified entity depends on the citizenship of its members, not on the state of formation or the position of the main place of business.
Therefore, the complaint did not sufficiently had the complete diversity of citizenship between the parties.
Consequently, the court dismissed the action without bias due to lack of jurisdiction of the subject.
This was a lawsuit for breach of the contract and a violation of the tacit testament of good faith and fair transaction. The Contracting Parties of this action resulted in trade almost seven years ago, during which the defendants agreed to obtain from Deutsche Bank claim that the LEHman Brothers Holdings bankruptcy estate, Inc., with a $ 906 million person in return for a price of about $ 14.6 million.
Deutsche Bank claimed that, for more than five years, the defendants were frustrated by the parties’ ability to settle trade, refusing to execute the claim unless it includes either:
- Literally impossible representations and guarantees, which will be violated as the assignment was signed, which is obviously not something Deutsche Bank agreed when it entered trade. or
- The idiosyncratic language of compensation that exceeds the parties that agreed the parties when they agreed to trade.
On September 15, 2008, Lehman Brothers Holdings, Inc., which was then the fourth largest investment bank in the United States, applied for bankruptcy in accordance with Chapter 11 of the United States Bankruptcy Code.
Lehman’s bankruptcy deposit remains the largest bankruptcy deposit in the history of the United States. On the day he submitted his report, Lehman owned about $ 639 billion in assets and was due about $ 619 billion in obligations.
After Lehman started the bankruptcy process, a secondary market emerged for the sale and market for Lehman’s property.
This case includes a trade in which Deutsche Bank and the defendants reached an agreement on the sale of LEHMAN assets in the form of two written trade confirmations. Deutsche Bank claims that the defendants have violated their obligations to Deutsche Bank by (i) to unjustifiably refuse to execute the claims of the claim with Deutsche Bank on the terms agreed by the parties and (ii), otherwise refusing to work together in good faith with Deutsche Bank.
The accused Finepoint is an investment manager based in Boston, Massachusetts, with about $ 4 billion in management assets. The defendants Warbler Run I and Warbler Run II are two limited liability companies that, with information and belief, were created and controlled by Finepoint for the purpose of possessing assets.
On a telephone call on November 7, 2018, Deutsche Bank and Finepoint discussed the terms of the trade in which the defendants will pay Deutsche Bank $ 14.677.200 in exchange for claims of $ 906 million, divided as follows: a. $ 7.516.251.35 for the assignment of LEHMAN’s assets with $ 463.966.133.00 in Warbler Run I LLC (the “Warbler Run I Transaction”). and b. $ 7.160.948.65 for the assignment of LEHMAN assets with a face of $ 442.033.867.00 in the Warbler Run II LLC (the Warbler Run II transaction “and collectively with the Warbler I Run I” trade “).
The market price for commerce represented 1.62% of the person entitled to the claims to be assigned.
Immediately after discussions with Finepoint on November 7, 2018, Deutsche Bank knew that the accused had not revealed the existence of some of Lehman and Deutsche Bank earlier that year and that it was a claim that would be partially entrusted to the defendants.
On July 23, 2018, Deutsche Bank had received a letter from Lehman, as the manager of the plan for its own bankruptcy estate, on claim no. 58233, for which Deutsche Bank was the record holder (the letter Lehman).
In Lehman’s letter, Lehman claimed that this claim represented a “guarantee claim”, that there was a corresponding “primary claim” against his property and that Lehman was supposed to be paid to claim no. 58233, failing to believe in payments already made in this “primary claim”. Lehman then requested the repayment of Deutsche Bank of the alleged over -paid amount.
At the time the LEHMan letter was sent, Deutsche Bank and Lehman dealt with an unnecessary but high dispute over the hundreds of millions of dollars of enhanced capital preferred mobile values (“ECAP”) issued by London’s subsidiary. Deutsche Bank immediately recognized the letter Lehman on what it was: a transparent, weak and ultimately unsuccessful attempt to create leverage for use in the ECAP dispute.
Deutsche Bank immediately created a phone call with Lehman – along with Deutsche Bank and Lehman’s external adviser – to discuss the letter Lehman. This phone call was made on August 22, 2018.
During the phone call, Deutsche Bank questioned Lehman’s proposal that claim no. 58233 was a “guarantee claim” capable of reducing or limiting the payments made to a claim, but also repeatedly asked Lehman to clarify what “primary claim” had supposedly not discovered that it was related to the number 58233.
Also, during the phone call, Deutsche Bank revealed to Lehman that Deutsche Bank had sold participation in almost all claims no. 58233 (that is, a legal right to share in any distributions) to other investors, so that if Lehman sought this request for repayment and somewhat prevailing, other creditors, instead of Deutse Bank, would make the obligations that would make the obligation to disappoint.
Lehman’s obvious frustration when he heard these news during the call and Lehman’s reluctance to push the issue further after the call confirmed Deutsche Bank’s conclusion that the letter Lehman was sent only to build leverage on the ECAP dispute and that Lehman did not believe.
Following the phone call on August 22, 2018, Lehman never tried to follow the request for repayment, never sent any monitoring communication on this request and never withheld any distribution of the alleged already excessive claim no. 58233 Based on the allegations made in the LEHMAN letter. In the nearly six years since the phone call of August 22, 2018, Lehman was not contacting Deutsche Bank again on this issue.
However, from the abundance of attention, Deutsche Bank has decided to make a complete, honest and immediate disclosure to the defendants of both the Lehman and the phone on August 22, 2018, and to do so before the parties executing written confirmations for the trade. Therefore, in a matter of minutes of reaching the November 7, 2018 agreement, Deutsche Bank gave another phone call to Finepoint to: (i) bring the letter Lehman to her attention and (ii) to discuss a conference the next day between Deutsche Bank, FinePoint and Deutsche Bank. August, Lehman’s phone call with Lehman, to discuss the issues and answer every point he may have.
During November 8, 2018, the conference between Finepoint, Deutsche Bank and Deutsche Bank, Finepoint, did not express the belief that the letter Lehman was of significant importance to trade and did not suggest that the revelation of the Lehman letter demanded the parties to re -expose or re -establish their terms of November 7, 2018.
In short, it was immediately apparent that none of the parties examined the existence of the Lehman letter to be important for their trade.
However, after the execution of trade confirmations, when it was time to plan and perform the claims, Finepoint began to exploit the existence of the Lehman letter to try to convert this transaction into a scenario for the accused, with Deutsche Bank.
Specifically, Finepoint seized the fact that trade confirmations: (i) included a statement that “assignment of the claim would contain [] The usual representations, guarantees, wills and allowances, including, to avoid doubt and without restriction, those previously provided by the seller in similar transactions “, as well as (ii) adapted such an example of a” similar transaction[]”(Which actually reflected a” participation of claim “, not a claim assignment), which included a representation, it was simply not in this transaction, that” the seller has not received any notice that the participating interest is invalid or canceled or subject to any prohibition, any prohibition. . . . ”
Deutsche Bank says it has been damaged by the defendants’ refusal to settle trade. Deutsche Bank spent millions of dollars to obtain the claims in question for the sole purpose of selling these allegations to the defendants. The infringement of trade confirmations by the defendants left Deutsche Bank Holding Complex, long -term assets in her books that was not expected to keep for more than a short period. As a result, Deutsche Bank has suffered compensation, including, for example, the cost of Pocket, administrative spending, opportunity costs, interest and investment damage.
Deutsche Bank has claimed that these expenses and losses, at an amount to be tried, are the immediate and close result of the defendants’ violations and are in millions of dollars. Deutsche Bank claimed to have the right to become a whole for these losses.
After the dismissal, Deutsche Bank expects to upgrade its claims to the state court. Some states have “savings statutes” that do not apply if an action is “voluntarily interrupted” by the plaintiff.