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LEhman Oct 16
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Former Meadowlands Builder Says Lehman Unit Owes $1.3B
Oct 16, 2015 | Law360
By Cara Salvatore
The developer that lost control of the gargantuan Meadowlands Xanadu complex fought Thursday to extract $1.3 billion from a Lehman Brothers-affiliated lender, telling a New York appeals court that the lender likely foresaw that exiting their deal would cause a devastating default. -
Jeb Bush At Lehman Brothers: Florida Official Joked About Bush’s Influence Over State Pension
Oct 15, 2015 | Political Capital
By Andrew Perez & David Sirota
It was early 2008, and Florida lawmakers were under pressure to explain how the state’s pension officials had come to buy massive quantities of toxic assets from Lehman Brothers. After the investments defaulted, politicians wanted to know whether Jeb Bush -- who joined the Wall Street firm in 2007 as a consultant just months...
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Former Meadowlands Builder Says Lehman Unit Owes $1.3B
Oct 16, 2015 | Law360
By Cara Salvatore
The developer that lost control of the gargantuan Meadowlands Xanadu complex fought Thursday to extract $1.3 billion from a Lehman Brothers-affiliated lender, telling a New York appeals court that the lender likely foresaw that exiting their deal would cause a devastating default.
An attorney for ERC 16W LP, the real estate entity that was going to build the entertainment complex, told a four-judge appeals panel on Thursday that the Lehman unit, Xanadu Mezz Holdings LLC, is on the hook for the massive amount of equity that ERC had to pour into the project because the Lehman unit was aware that a failure to fund would have a domino effect and cause the loss of all that equity. When the investment bank collapsed and stopped funding its promised loan, ERC defaulted and its other lenders in the syndicate foreclosed.
Because XMH could have seen trouble coming down the pike, consequential damages are available unless explicitly excluded from the contract, ERC said. It urged the panel to reopen the suit and make the defendants liable for consequential damages.
Members of the panel immediately questioned the idea.
“Usually consequential damages are not sought and are not even considered in a breach-of-contract claim,” Justice Karla Moskowitz said to ERC’s attorney, Sheron Korpus of Kasowitz Benson Torres & Friedman LLP.
But Korpus said XMH passed the foreseeability test for many reasons, among them the difficulty of finding a replacement lender.
"It was reasonably foreseeable that [XMH] would be the hardest to replace,” Korpus told the appeals panel Thursday. “They were the bottom tranche.”
XMH knew that its sudden funding halt after it put in the first $84 million of an expected $208 million would pull the whole deal apart despite the fact that they were far from the only lender in the billion-dollar deal, Korpus said.
XMH’s attorney, Jacob Pultman of Allen & Overy LLP, said precedent cut against ERC, creating a barrier to consequential damages that ERC couldn’t get over. The law makes the opposite assumption and limits the bill for the project’s collapse to $22.9 million, the amount that ERC covered for XMH in early 2009, he said.
“What you need is to demonstrate that the parties agreed to provide consequential damages in the case of a breach,” Pultman said. “This is not a standard, that you give out consequential damages in a breach of contract suit readily.”
He also pointed to an indemnity-related portion of the deal, in which he said the agents and lenders are stated to be entitled to indemnity.
“The critical piece that’s missing there is ‘borrower,’” Pultman said. “That language makes it very clear the borrower doesn’t have the right to pursue such claims.”
According to Judge Marcy Friedman's January decision granting a motion to dismiss, the contract between ERC and XMH does not "suggest or provide" that XMH should be on the line for the consequential damages.
And Pultman’s appeal brief echoed that view, saying consequential damages “are recoverable only where the parties specifically contemplated at the time of contract execution that the defendant assumed liability for the particular damages sought.”...For full story: http://www.law360.com/articles/714972/former-meadowlands-builder-says-lehman-unit-owes-1-3b
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Jeb Bush At Lehman Brothers: Florida Official Joked About Bush’s Influence Over State Pension
Oct 15, 2015 | Political Capital
By Andrew Perez & David Sirota
It was early 2008, and Florida lawmakers were under pressure to explain how the state’s pension officials had come to buy massive quantities of toxic assets from Lehman Brothers. After the investments defaulted, politicians wanted to know whether Jeb Bush -- who joined the Wall Street firm in 2007 as a consultant just months after leaving the governor’s office -- had been involved in persuading his former government colleagues to invest state money in Lehman.
Bush has denied any involvement in the transactions, which might eventually cost Florida taxpayers as much as $1 billion.
But a state official named Michael Lombardi -- who managed investments for the part of Florida’s pension that bought Lehman assets -- invoked Bush’s name in a Jan. 9 email exchange with a Lehman managing director who was announcing his new job at the firm.
“Congratulations on the new career!” Lombardi wrote in the email, which was obtained by International Business Times through an open-records request. “Of course, you understand we can never speak to each other unless I get the word from Jeb! (Ha, ha!)”
Lombardi’s suggestion -- that Bush, as a Lehman consultant, wielded influence over Florida pension decisions -- looks like a joke, but the email may rekindle questions about the former governor’s role at the doomed Wall Street bank.
Bush’s gubernatorial administration steered Florida pension money to Lehman before Bush got his $1.3 million-a-year job at the firm. Emails show Bush as governor periodically recommended specific pension investment decisions, and the fund was run by one of his allies. Real estate mogul Donald Trump, who is running against Bush in the Republican primary, has called Bush’s Lehman post “a no-show job,” claiming that Lehman rewarded him for directing public employees’ retirement money to the firm...
For full story: http://www.ibtimes.com/political-capital/jeb-bush-lehman-brothers-florida-official-joked-about-bushs-influence-over-state
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