Finepoint Capital Challenges Deutsche Bank Lehman Claims

Finepoint Capital challenges Deutsche Bank complaint regarding claims tied to Lehman Brothers’ bankruptcy estate. The dispute, which has been simmering for nearly six years, escalated on July 9, 2024, when Finepoint submitted a letter to the New York Southern District Court signaling its plan to file a motion to dismiss the case under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

The case revolves around allegations of breach of contract and breach of the implied covenant of good faith and fair dealing. The controversy began when Deutsche Bank and Finepoint Capital entered a trade agreement in which Finepoint agreed to purchase claims against Lehman Brothers Holdings, Inc.’s bankruptcy estate. Moreover, these claims had a face value of $906 million, with Finepoint agreeing to a purchase price of approximately $14.6 million.

Finepoint Capital Challenges Deutsche Bank Lehman Claims

Deutsche Bank contends that Finepoint has obstructed the settlement of this trade by refusing to execute a claim assignment for over five years. The bank accuses Finepoint of unreasonably delaying the deal’s completion and seeks to hold them accountable for what Deutsche Bank views as a breach of their agreement.

In its defense, Finepoint argues that Deutsche Bank has no grounds to hold it liable. According to Finepoint, Deutsche Bank failed to meet an express condition precedent related to an undisclosed risk known as the “Impairment Risk.” Finepoint asserts that it never agreed to assume this risk and that the trade confirmations, prepared and signed by Deutsche Bank, explicitly allocated this risk to Deutsche Bank. The confirmations required Deutsche Bank to either provide a representation that no such risk existed or offer an acceptable indemnity.

Finepoint asserts that Deutsche Bank’s failure to provide the necessary representation or indemnity resulted in the formation of no binding contract. Finepoint concludes that Deutsche Bank’s attempts to renegotiate the terms through litigation should be rejected and the claims dismissed. As the legal battle unfolds, the court’s decision on the motion to dismiss will pivotally determine the fate of Deutsche Bank’s complaint.

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