New York City-based Cerberus Capital Management, L.P. is firing back at Canadian Imperial Bank of Commerce (CIBC) in a legal dispute that stems from a transaction the two firms entered in 2008 at the height of the financial crisis.
The private equity firm issued a statement on Tuesday defending a lawsuit filed by an affiliated investment vehicle against CIBC, alleging that the bank has defaulted on loan agreements with Cerberus.
“Cerberus did not file this lawsuit lightly; it was forced to do so in order to recover the contract payments owed to it by CIBC. Cerberus has sought to resolve its dispute with CIBC for years, and only filed this lawsuit after CIBC refused to engage in any meaningful discussions regarding its contractual obligations,” says Cerberus chief operating officer, general counsel and senior managing director, Mark Neporent, in the statement.
A Cerberus affiliate, “… provided CIBC the lifeline that it needed during the financial crisis in the fall of 2008,” Neporent explains.”CIBC publicly touted the benefits of that investment and cited the transaction to quell market concerns relating to its high risk real estate-related assets. Now that CIBC has received the benefits of that investment and both the economy and its performance have improved, CIBC has refused to live up to the clear and unambiguous contract terms, drafted by CIBC and its counsel,” Neporent says.
On Monday, CIBC revealed the existence of the suit when it issued a statement declaring that it believes that it has lived up its obligations under the transaction in question, and insisting that the suit is without merit.”CIBC has fully performed its obligations with respect to its agreement with Cerberus and believes that Cerberus’ lawsuit is without merit,” it said, adding that it will defend itself vigorously.
No merit to Cerberus lawsuit, CIBC says
Neporent criticized CIBC’s statement on the case. “CIBC’s attempt to rewrite history by asserting in a press release that the complaint reflects a ‘manufactured,’ after-the-fact interpretation of the contract documents is without merit in fact or law,” he says. “The relevant documents are clear, unambiguous and reflect the parties’ intentions and expectations. Cerberus is merely seeking to enforce the plain language of the contract documents and hold CIBC responsible for its obligations. Cerberus is confident that the court will interpret and enforce the contracts precisely as the parties agreed and memorialized in their agreements.”