Less than a month after Deutsche Bank filed a complaint against Finepoint Capital over Lehman Brothers bankruptcy estate claims, the defendants have made it clear they intend to contest the complaint.
In a letter filed in the Southern District Court of New York on July 9, 2024, Finepoint stated its intention to file a motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss Deutsche Bank’s complaint.
This is an action for breach of contract and breach of the implied covenant of good faith and fair dealing. The parties to this action entered into a transaction nearly six years ago in which the defendants agreed to acquire claims from Deutsche Bank against the bankruptcy estate of Lehman Brothers Holdings, Inc., for a nominal amount of $906 million, in exchange for a purchase price approximately $14.6 million.
Deutsche Bank contends that, for more than five years, the defendants frustrated the parties’ ability to settle the Trade by unreasonably refusing to execute an assignment of claim.
Finepoint argues that DB’s attempt to hold Finepoint liable for its refusal to consummate a nearly six-year-old transaction—one in which DB failed to meet an express condition—should be dismissed.
After the parties initially agreed to the basic terms of the transaction, DB discovered—and attempted to transfer to Finepoint—a specific, previously unknown risk (the “Impairment Risk”).
Finepoint says it never agreed to accept the Risk of Impairment and had no obligation to do so. Indeed, the signed trade assurances (which DB itself prepared and executed) expressly allocated the Risk of Impairment to DB by specifically requiring DB to declare that no such risk existed. The commercial confirmations made it an express condition of a final agreement that DB provide either this accurate representation or acceptable compensation.
Defendant says that when DB refused to provide either the required representation or indemnification, the condition precedent failed and therefore no binding contract to complete the trade ever arose.
Finepoint concludes that DB’s current attempt to renegotiate the parties’ agreement through litigation should be denied and its claims against Finepoint dismissed.