CIBC to appeal New York court’s decision to pay 848 million
2023.01.04 13:28
CIBC to appeal New York court’s decision to pay 848 million
Budrigannews.com – In a contract dispute connected to the global financial crisis of 2008, the Canadian Imperial Bank of Commerce intends to appeal a New York judge’s order that it pay private equity firm Cerberus Capital Management approximately $848 million in damages.
In a proclamation on Wednesday, the Toronto-based bank said it hopes to take a C$1.16 billion pre charge, or about C$850 million ($629 million) after charges, in its first-quarter results, decreasing its proportion of cash-flow to resources.
Additionally, it stated that it “strongly disagrees” with the legal and factual foundations on which Justice Joel Cohen of a New York state court in Manhattan awarded Cerberus $491 million in damages and an estimated $357 million in interest on Tuesday.
On Wednesday, inquiries regarding their client Cerberus did not immediately receive a response.
Banks battled during and after the monetary emergency to contain their openness to mounting defaults and falling protections costs as the U.S. real estate market imploded and credit conditions fixed.
In a complex 2008 structured note transaction, Cerberus and CIBC exchanged payments to a Cerberus entity for a $571 million loan to reduce their exposure to residential real estate in the United States. This led to the disagreement between the two companies.
In November 2015, Cerberus filed a lawsuit against CIBC, claiming that the bank underpaid some of its debts and stopped making some payments altogether following the default of a group of credit default swaps and the liquidation of the underlying bonds.
CIBC argued that Cerberus had misunderstood the agreements and had accepted the alleged underpayments for a number of years.
Cohen found CIBC liable for breach of contract on December 1 after a non-jury trial and rejected the bank’s counterclaims, including that Cerberus acted fraudulently.
Cohen wrote that “the evidence did not… show that CIBC was a hapless rube led astray.”
The damages award on Tuesday came after the oral arguments. By January 13, Cohen required Cerberus and CIBC to submit a proposed judgment.
Securitized Asset Funding 2011-2 Ltd v. Canadian Imperial Bank of Commerce et al., New York County, New York State Supreme Court, No. 653911/2015.
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