Barclays’s Mexican unit sued Urbi for breach of contract in state court in Manhattan, saying the builder failed to pay $3 million that was due March 15 after the bank had to terminate a 2010 swaps and derivatives agreement.
Barclays Bank Mexico SA said in a complaint filed April 8 that it ended the agreement after Urbi didn’t post additional collateral in January “to cover potential losses relating to open transactions with the bank.” Urbi owes the Barclays unit $11.6 million, according to the complaint.
Urbi had asked state Supreme Court Justice Shirley Werner Kornreich in Manhattan to dismiss the suit for lack of personal jurisdiction, saying it’s based on a transaction between two Mexican companies that’s governed by English law. Kornreich denied the request, saying that the parties chose New York as the venue for legal disputes over the agreement.
“When the parties actually engaged in meaningful negotiations over where this lawsuit should be venued, they specifically picked this court,” Kornreich said. “Ultimately, the parties’ intent governs the court’s interpretation of their agreement.”
Arthur Steinberg, an attorney at King & Spalding LLP in New York representing Urbi, didn’t immediately return a voice-mail message seeking comment on the ruling.
Urbi faces lawsuits from banks including Credit Suisse Group AG and Deutsche Bank AG on defaulted loans and missed payments. Mexico’s third-largest homebuilder by sales has seen its cash flow plunge as the nation shifted housing policy to favor urban apartment developments over single-family homes in outlying areas, requiring greater initial investment.
Urbi, based in Mexicali, Mexico, said May 6 it won’t make make an interest payment of 3.9 million pesos ($320,039) on notes due in 2014. The company’s sales plunged 85 percent to 468 million pesos in the first quarter as it limited operations and hired Rothschild as a financial adviser to consider a debt restructuring. Its cash and cash equivalents fell 95 percent in the first quarter from the previous quarter.
The case is Barclays Bank Mexico SA v. Urbi Desarrollos Urbanos SAB (URBI*) de CV, 651226/2013, New York State Supreme Court, New York County (Manhattan). The other cases are Credit Suisse International v. Urbi, 651318/2013, and Deutsche Bank AG v. Urbi, 651676/2013.
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