Deutsche Bank Securities, which helped arrange the credit facility in 2016 and was sued two years later for allegedly duping the creditors into the loan, said investors that also include Highbridge Capital Management LLC and Cerberus Capital Management LP are falsely claiming they relied on the German company’s analysis of SunEdison before making the loan.
Apollo Global Management Inc., Elliott Investment Management LP and different investors in upset corporate debt were sued by a unit of Deutsche Bank AG for allegedly making bogus cases about its role in a $725 million loan to SunEdison Inc. before the energy organization filed for bankruptcy. The claim is the most recent legitimate spat over the loan. A California judge in July 2020 denied Deutsche Bank’s motion to excuse a suit recorded in 2018 by an entity formed to address the lenders, SESL Recovery LLC. That case is set for trial in July.
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In a complaint filed Monday in New York state court in Manhattan, Deutsche Bank said it “did not independently generate or communicate its own analyses and had no role in advising the lenders or otherwise helping them assess their potential investment.”
The bank added that the lenders made a “calculated bet” on a company that was under intense financial pressure in January 2016, and it simply “did not pay off,” according to the complaint. SunEdison filed for bankruptcy on April 21, 2016.
Deutsche Bank “now faces hundreds of millions of dollars in alleged liability and has already incurred millions of dollars in foreseeable fees and costs to defend itself,” it said in the new complaint.
SESL attorney Andrew K. Glenn declined to immediately comment on the lawsuit when reached by phone on Wednesday.
SESL’s earlier suit alleged Deutsche Bank goaded second-lien lenders by lying about SunEdison’s financial health to reap fees. The bank also sought to protect its $1 billion of loans, issued with its affiliates, to SunEdison that it “knew were in jeopardy,” according to the lenders’ earlier complaint.
The lenders, who are seeking hundreds of millions of dollars in damages, also allege that Deutsche Bank and SunEdison misled them into believing the funds would be used for funding new development, knowing that the money would instead be used to repay a critical vendor and keep the business afloat.
SunEdison emerged from bankruptcy in late 2017 following over a year of Chapter 11 proceedings in which the company recouped over $2.3 billion through gross asset sales. The case is Deutsche Bank Securities Inc. v. 683 Capital Partners LP, 650164/2022, Supreme Court of the State of New York (Manhattan).
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