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Structured
Highland asks court to throw out UBS's $686 million lawsuit over a CDO
Dallas-based Highland Capital Management has asked a New York court to dismiss a $686 million lawsuit filed against it by UBS. This is the third time that the bank has attempted legal action against Highland claiming the manager “fraudulently induced” the bank to restructure a CDO in 2008. The suit is being filed against Highland Crusader an affiliate of the manager.
Previous complaints against the manager had asserted that the CDO restructuring allowed Highland to side-step an $86 million payment. The CDO is then said to have deteriorated resulting in losses to UBS amounting into hundreds of millions of dollars.
Highland has rejected claims made by UBS and in response to the allegations stated “here we go again”, according to court filings.
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CFlux secondary
CLO index levels:
| Index | 21 May |
|
| CFlux USD AAA | ↑ | 96.2 |
| CFlux USD AA | ↑ |
88.3 |
| CFlux USD A | ↓ | 84.1 |
| CFlux USD BBB | ↓ | 75.3 |
| CFlux USD BB | ↓ |
74.1 |
| CFlux USD EQ | ↑ | 77.5 |
I suspect UBS probably fired anyone who had knowledge of this transaction in 2008 or 2009, to save a million or two $$. Now, UBS only has legal resources,and lacks the structuring resources, needed to fight the battle. Penny wise, pound foolish? Just conjecture on my part, but you can see this in the way some banks deal with legacy issues - fire everyone first, ask questions later.
It's very interesting to see how one reacts to be on the other side of pain .. I thought UBS were the structuring "experts", hmmmm. And they didn't note the nuances of the restructuring?