The U.S. Court of Appeals for the Second Circuit issued a decision affirming in part and reversing in part a decision by the District Court for the Southern District of New York in which the Second Circuit held that tens of millions of dollars taken by the special servicer must be returned to certificate holders of commercial mortgage-backed securities trusts.
The Second Circuit’s decision is the latest phase of years-long litigation arising from the $5 billion sale of the Stuyvesant Town-Peter Cooper Village apartment complex in Manhattan (“Stuy Town”) pertaining to a dispute over whether the special servicer or certificate holders of the commercial mortgage backed securities trusts are entitled to certain proceeds from the sale of Stuy Town, one of the largest properties in New York City. Thomas E. Redburn, Jr., Chair of Lowenstein Sandler’s Securities Litigation practice, argued the appeal before the Second Circuit.
In its decision, the Second Circuit found that the District Court erred in denying Appaloosa Management L.P.’s (“Appaloosa”) motion for partial summary judgement. Specifically, the Second Circuit held that a significant portion of the $67.2 million attributable to Interest on Advances accruing on or before June 3, 2014 must be paid out of late payment charges and Penalty Interest, meaning the Special Servicer, CWCapital Asset Management LLC, improperly took for itself tens of millions of dollars belonging to certificate holders.
Maya Ginsburg also represents Appaloosa.
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