Deutsche Bank AG, through its London Branch, has initiated legal action against Finepoint Capital LP, Warbler Run I, LLC, and Warbler Run II, LLC, filing a complaint with the New York Southern District Court on June 14, 2024. The lawsuit alleges a breach of contract and breach of the implied covenant of good faith and fair dealing stemming from a trade agreement made nearly six years ago.
In 2018, Deutsche Bank entered into an agreement with the defendants wherein they agreed to purchase claims against the bankruptcy estate of Lehman Brothers Holdings, Inc. for approximately $14.6 million. The claims had a face amount totaling $906 million. The lawsuit contends that Finepoint Capital and its associated entities have obstructed efforts to finalize the trade by unreasonably refusing to execute the necessary assignments of a claim under terms originally agreed upon. Deutsche Bank asserts that the defendants’ actions included demanding unrealistic representations and warranties or excessive indemnification terms.
Legal Action: Deutsche Bank Sues Finepoint Capital for Breach of Contract
The dispute originates from a series of communications involving Lehman Brothers’ bankruptcy estate, particularly a letter dated July 23, 2018, regarding a claim related to Lehman’s estate. Deutsche Bank communicated with Finepoint promptly after the initial agreement in November 2018.
Despite this disclosure and subsequent discussions that confirmed the issue’s immateriality to the trade, Deutsche Bank alleges that Finepoint later exploited the existence of this letter to delay or renegotiate terms to their advantage post-agreement. The bank claims damages, including out-of-pocket costs, administrative expenses, lost opportunity costs, and investment losses, all stemming from Finepoint’s alleged failure to fulfill their obligations under the trade confirmations.
Deutsche Bank seeks compensation for these damages, asserting that Finepoint’s breaches have caused significant financial harm, the extent of which will be detailed during the trial. The case underscores the complexities and risks involved in secondary market transactions related to major bankruptcies such as Lehman Brothers, highlighting the critical role of contract compliance and good faith dealings in such agreements.
The defendants named in the complaint, Finepoint Capital LP, Warbler Run I, LLC, and Warbler Run II, LLC, have not publicly commented on the litigation at this time.
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