(July 12 – 10:50 ET) – The Globe and Mail reports this morning that Livent Inc.’s unsecured creditors are suing the Canadian Imperial Bank of Commerce alleging the bank was grossly fraudulent in dealing with theatre impressario Garth Drabinsky’s former firm.
The suit was filed yesterday in United States Bankruptcy Court, in the Southern District of New York. It alleges that CIBC cooperated with Livent in fraudulent activities at the firm that were revealed after it was sold in 1998. It claims that since CIBC was involved with Livent in multiple roles, including lender, underwriter, and research, it should have forseen the company’s troubles and sounded the alarm.
“The grossly fraudulent and inequitable conduct of the CIBC entities created an unfair advantage for the CIBC entities and harmed Livent and its creditors by forcing Livent into bankruptcy,” it alleges.
CIBC is also being sued by Hollywood agent Michael Ovitz, alleging CIBC conspired with Livent to defraud him of US$20 million. The bank also faces an action from a group, including bondholders, against a slew of players in the Livent fiasco.
The Ovitz suit and this latest suit slam CIBC for a secret side deal it had with Livent that was never disclosed to Ovitz when he stepped up to buy into the firm. Ovitz had CIBC’s investment banking arm, CIBC World Markets Inc. prepare a fairness opinion on the deal that never mentioned the deal. Ovitz later discovered both the secret deal and an apparent extensive fraud at Livent that brought the firm down.
CIBC declined to comment on this latest lawsuit. It has previously denied similar allegations made against it.
-IE Staff