In the lawsuit, Appaloosa says CW Capital shouldn't have moved to foreclose on the complex while earning fees. The complaint says a foreclosure could cost as much as $200 million in transfer taxes, which would be paid by the investors who own the CMBS bonds....
"The key is, the servicer has to practice its fiduciary duty" to CMBS investors, Mr. Tepper said. "Why did they go into foreclosure? Why are they taking all these excess costs?"
Thursday, February 25, 2010
Appaloosa attacks Special on Stuy Town
Tepper sues CW Capital...
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3 comments:
This seems to me a frivolous nonsense lawsuit. Appaloosa is the 11th junior lender and are certain to get nothing back on a foreclosure, so why not file a lawsuit and hope an arbitrary decision makes them at least in part money-good?
I think they also hold bonds, not sure which trust(s) or what class, in addition to mezz. I'm not sure so would be interested in hearing from anyone with more detail
It's hard to say by reading the journalists' misconstrued version of events, and I did not read the suit, but... it sounded like they owned bonds, not the b-piece either because they accused the special of owning it (again, didn't read the suit, just the article). Maybe they have some senior exposure paid for at a discount, and are angling to get par back to in turn help finance part of the buy out. Maybe they're in a position to get hit with interest shortfalls from the $200mm fees.
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