Canadian Imperial Bank of Commerce to Dispute, Appeal Liability Ruling Brought on by Cerberus Capital
December 02 2022 - 9:15AM
Dow Jones News
By Adriano Marchese
Canadian Imperial Bank of Commerce said Friday that it intends
to appeal a liability ruling against it in a lawsuit brought on by
an entity controlled by private equity firm Cerberus Capital
Management L.P.
The lawsuit was filed by Cerberus in November 2015 against the
Canadian financial institution relating to a transaction that took
place in late 2008 in which CIBC issued a limited recourse note to
Cerberus specifying certain payment streams, as well as another
transaction three years later in which CIBC sold a residual
interest in that payment streams to Cerberus.
CIBC said the New York court that issued the liability ruling
hasn't yet determined any damages against CIBC, but Cerberus has
claimed damages of $1.07 billion, which includes prejudgment
interest up until March of this year.
The court is expected to hear the parties' arguments on damages
on Dec. 19.
CIBC said it hasn't set aside a provision in its fiscal 2022
results to cover the claim if the ruling were to swing against the
bank because it believed it was "more likely than not to prevail at
trial." However, it has set aside a material amount for the matter
in the range of reasonably possible losses for legal claims, it
said.
CIBC expects to recognize a provision in its first quarter of
2023 results, but an estimate for that figure will be informed by
developments during the period.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
December 02, 2022 09:00 ET (14:00 GMT)
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