Highland files CLO warehouse lawsuit against lawyers, reports Reuters

Highland Capital is suing law firm Orrick, Herrington and Sutcliffe over a 2008 CDO which failed to launch, according to Reuters. Dallas-based Highland Capital is currently engaged in court proceeding with RBS this week, with the bank turning to the UK courts to block the manager from filing a $100 million lawsuit in Texas, in a case relating to the same CDO.

RBS had opened a warehouse line for a new Highland CLO back in 2008 just as the credit markets crashed. The deal did not close despite an amendment to extend the the deal’s deadline. RBS then called in its loan resulting in losses for the manager.

Highland now alleges that Orrick, which represented the manager at the time, failed to notify Highland that the extension to the contract included a clause which enabled RBS to terminate the agreement at any time. According to the article, Highland asserts it would not have paid out $65 million to extend the contract had it known of such a clause.

A lawyer representing Orrick is cited as saying that having missed out on its first target (RBS) Highland is “looking for someone else to blame”.