Toronto-based Canadian Imperial Bank of Commerce (CIBC) announced on Monday that “it will vigorously defend itself” against a lawsuit filed on Oct. 30 by a special purpose vehicle controlled by U.S. private equity firm Cerberus Capital Management L.P.
“CIBC has fully performed its obligations with respect to its agreement with Cerberus and believes that Cerberus’ lawsuit is without merit,” the bank says in a statement.
According to the banks’ announcement, the claim relates “to an October 2008 transaction in which CIBC issued a limited recourse note to Cerberus which significantly reduced CIBC’s exposure to the U.S. residential real estate market. In 2011, CIBC subsequently sold a residual interest in the specified payment streams to Cerberus.”
CIBC maintains that it has satisfied its obligations under the deal, including making payments of more than $1.24 billion. However, the private equity firm disagrees with that view, CIBC reports.
“Only now has Cerberus manufactured an entirely new interpretation of the deal, claiming CIBC has defaulted and purportedly owes it unspecified additional payments of ‘at least hundreds of millions of dollars’. This is wholly inconsistent with the agreement, the intent of both parties and the performance of both CIBC and Cerberus since 2008,” the bank says.
The lawsuit was filed in U.S. federal court in Manhattan on Oct. 30.