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Lehman May 21
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Moore Capital Can't Limit Exposure In $20M Lehman Swap Suit
May 20, 2015 | Law360
By Jonathan Randls
...U.S. Bankruptcy Judge Shelley C. Chapman denied Moore Capital's motion to dismiss counterclaims for interest tied to the alleged breach and for coverage of Lehman's attorneys' fees. Lehman is counterclaiming that Moore Capital dragged its feet in paying what it owes after terminating the swaps in 2008 — shortly after the investment bank ... -
Spanish Broadcasting Investors' Share Repurchase Suit Pared
May 20, 2015 | Law360
By Ben Conarck
A Delaware Chancery Court judge on Tuesday kept alive a breach of contract claim by a group of preferred stockholders of Spanish Broadcasting System Inc. but turned aside other claims over their share repurchase rights after having dismissed identical accusations in a prior suit by Lehman Brothers Holdings Inc.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Moore Capital Management LLC
Spanish Broadcasting System Inc.
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Moore Capital Can't Limit Exposure In $20M Lehman Swap Suit
May 20, 2015 | Law360
By Jonathan Randls
A New York bankruptcy judge refused Tuesday to limit Moore Capital Management LLC's potential liability in a $20 million dispute over swap agreements with Lehman Brothers Holdings Inc., saying establishing whether the hedge fund sponsor is liable for alleged contract breaches must come first.
U.S. Bankruptcy Judge Shelley C. Chapman denied Moore Capital's motion to dismiss counterclaims for interest tied to the alleged breach and for coverage of Lehman's attorneys' fees. Lehman is counterclaiming that Moore Capital dragged its feet in paying what it owes after terminating the swaps in 2008 — shortly after the investment bank collapsed, sending shock waves through the global financial market.
At a hearing in Manhattan, Judge Chapman said her making any finding at this early stage in the ligation, and before liability is established, would set “a troubling precedent” that could impact potential recoveries for Lehman. It's the second motion to dismiss brought by Moore Capital that Judge Chapman has denied.
“On the record I have today, there is not a basis to dismiss,” Judge Chapman told Moore Capital's attorneys.
Moore Capital sued Lehman in June, seeking an order absolving the hedge fund of having to pay $20 million that Lehman says Moore Capital owes on swap agreements that were signed before the investment bank entered bankruptcy.
The hedge fund's suit says Moore Capital already paid Lehman $60 million to settle the amounts owed under the swap agreements, which Moore Capital entered into with Lehman Brothers Special Financing Inc. in July 2008, just a couple of months before Lehman sought Chapter 11 relief.
But Lehman contends that the $60 million wasn’t enough and that Moore Capital breached the agreement by waiting eight months to come up with a valuation for the swaps. Lehman says Moore Capital is on the hook for 13 percent in annual interest, purportedly racked up over several years, because the fund waited an unreasonably long time to come up with the valuation and pay the money it owed.
At the hearing, Moore Capital's attorney Erik Groothuis of Schlam Stone & Dolan LLP argued that his client didn't breach the agreement because Lehman did not give adequate notice that the fund had allegedly been in default under the deal. Without a proper default notice and according to the agreement, Moore Capital cannot be assessed the additional interest.
“The parties knew perfectly well how to declare a default,” Groothuis said. “We say they did not.”...For full story:
http://www.law360.com/articles/657706/moore-capital-can-t-limit-exposure-in-20m-lehman-swap-suit
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Spanish Broadcasting Investors' Share Repurchase Suit Pared
May 20, 2015 | Law360
By Ben Conarck
A Delaware Chancery Court judge on Tuesday kept alive a breach of contract claim by a group of preferred stockholders of Spanish Broadcasting System Inc. but turned aside other claims over their share repurchase rights after having dismissed identical accusations in a prior suit by Lehman Brothers Holdings Inc.
The stockholders, who claim that the Spanish-language media giant is liable for breach of contract for failing to meet its obligations governing the repurchase of shares, held the same preferred stock as Lehman Brothers and made the same argument, Vice Chancellor Sam Glasscock III wrote in his opinion.
Vice Chancellor Glasscock turned aside arguments based on the stockholders’ right to call a special meeting and on the timing of when their shares were acquired and ruled that they had failed the meet the pleading burden to differentiate themselves from the parties in the Lehman Brothers case.
Vice Chancellor Glasscock had ruled in June that the stockholders had adequately pled the breach of contract claim, but he stayed the other three counts pending an outcome in the Lehman Brothers decision, which was affirmed in December.
In deciding Lehman, Vice Chancellor Glasscock found that Lehman Brothers stockholders had “acquiesced” in the incurrence of debt that allegedly breached a certificate governing the rights of stockholders in the case of a so-called voting rights triggering event, and therefore could not recover damages in connection with such a breach.
“Because the plaintiffs in Lehman Brothers and the plaintiffs here ... were situated identically for purposes of my analysis of acquiescence in that prior opinion, principles of issue preclusion — res judicata or collateral estoppel — prevent the plaintiffs from relitigating these issues,” Vice Chancellor Glasscock said.
The stockholders in the instant suit argue that the voting rights triggering event has been in effect since at least April 2010, when dividends that were due in July 2009 had remained unpaid for four consecutive quarterly dividend periods, according to the opinion. Under the certificate, SBS was contractually bound not to incur “indebtedness” while a voting rights triggering event was in effect.
Whether proceeding under the doctrine of res judicata or collateral estoppel, Vice Chancellor Glasscock said, the only issue to decide would be whether the stockholders are in privity with the Lehman Brothers plaintiffs, given that the question of whether the stockholders had acquiesced was already settled.
The stockholders contend that SBS has an obligation to take all actions that could generate funds to repurchase the preferred stock — such as issuing additional equity, taking on new debt or selling assets — as long as those actions wouldn't violate Delaware General Corporation Law. And if SBS' obligation is limited to the use of "legally available funds," they contend, the company must assess what legally available funds must be raised...For full story:
http://www.law360.com/articles/657706/moore-capital-can-t-limit-exposure-in-20m-lehman-swap-suit
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Moore Capital Management LLC
Spanish Broadcasting System Inc.
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