Capmark's $147 million lawsuit against Goldman thrown out

Tue Apr 9, 2013 4:58pm EDT
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By Nick Brown

NEW YORK (Reuters) - A federal judge halted a bid by real estate lender Capmark Financial Group CPMK.PK to recover $147 million from Goldman Sachs (GS.N: Quote) in connection with alleged conflicts of interest stemming from Capmark's debt restructuring.

In a written ruling on Tuesday, U.S. District Judge Robert Sweet in Manhattan said Capmark's arguments were barred because they contradicted statements it made in 2010, while bankrupt.

Capmark had accused Goldman of obtaining the payments by taking advantage of its dual role as one of Capmark's lenders while also holding a seat on its board.

Goldman acquired a 74 percent stake in Capmark in 2006, in connection with advancing $8.7 billion in credit facilities. It later placed Bradley Gross, one of its managing directors, on Capmark's board.

In May 2009, Capmark entered into a new, $1.5 billion credit facility to help it repay some of the initial debt. It contends that it paid Goldman $147 million in connection with reducing the size of the loan, a deal Goldman could manipulate because of its presence on the company's board.

Capmark filed for bankruptcy about five months later, in October 2009.

Sweet dismissed the lawsuit, saying Capmark flip-flopped on statements it made while in bankruptcy.

In 2010, as part of a settlement of similar claims in U.S. Bankruptcy Court in Delaware, Capmark argued that the Goldman loan restructuring was the "hard-fought" result of "arm's-length" negotiations.   Continued...

A Goldman Sachs sign is seen over the company's trading stall on the floor at the New York Stock Exchange, March 21, 2013. REUTERS/Brendan McDermid