Capmark Financial: Court approves settlement with lenders, rejects official committee's claims

By Lisa Kerner

Charlotte, N.C., Nov. 1 - Capmark Financial Group Inc.'s settlement with its pre-petition secured facility lenders was approved, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

In September Capmark asked the court to approve a settlement with the lenders including Aurelius Capital Management, LP; Brigade Capital Management, LLC; Centerbridge Partners, LP; Midtown Acquisitions LP; Elliott Associates, LP; Fir Tree, Inc.; Golden Tree Asset Management LP; Highbridge Principal Strategies, LLC; QVT Financial LP; Silver Point Capital LP; the Royal Bank of Scotland plc; and JPMorgan Chase Bank, NA.

As previously reported, under the proposed agreement Capmark will pay, among other items, the settling lenders 91% of the capped principal amount of the settling lenders' allocable share of $1.5 billion less payments made under the cash collateral order.

The judge found that the court should approve the settlement because "litigation over the secured lenders' claim would be complicated, time consuming and expensive," the filing said.

According to the filing, the proposed settlement "provides for a 'cash for collateral' swap where the secured lenders are foregoing their collateral, which the debtors value between $1.3 and $1.5 billion, in exchange for an upfront cash payment," saving the debtors' estate about $300 million.

Committee's objection rejected

Capmark's official committee opposed the settlement and did not believe it could be approved because there is no basis in the law to allow for the payment through a settlement.

In addition, the committee believes "that the debtor has settled too cheaply" and disputes that the collateral being left behind is worth anywhere near the $1.3 billion to $1.5 billion figure asserted, the filing said.

The court found that "the value of the collateral being left behind is well in excess of the cash for which it is being swapped."

Capmark Financial, a commercial real estate finance company based in Horsham, Pa., filed for bankruptcy on Oct. 25, 2009. Its Chapter 11 case number is 09-13684.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.