Highland Capital Sues UBS Securities Over Lyondell Loan

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April 11 (Bloomberg) -- Highland Capital Management LP sued UBS AG’s securities unit alleging UBS failed to allocate a $150 million loan Highland pledged to fund Lyondell Chemical Co.’s exit from bankruptcy.

Highland, the debt manager with about $22 billion in assets under management, alleges that Lyondell accepted its $150 million loan offer before UBS Securities LLC interfered to punish Highland over an unrelated dispute, according to a complaint filed today in U.S. Bankruptcy Court in Manhattan. The UBS unit was an agent to lenders who took part in a loan to fund Lyondell’s Chapter 11 exit.

“UBS, to further its own personal unrelated dispute with Highland, refused to allocate any of the term loan to Highland, and caused Lyondell to breach its contract,” according to the complaint. “Such raw abuses of power disrupt the commercial workings of the market and should be stopped and punished.”

The lawsuit seeks unspecified damages.

A federal bankruptcy judge ruled March 28 that a similar lawsuit Highland filed in state court was barred by Lyondell’s reorganization and said Highland could refile in federal court.

LyondellBasell Industries NV, based in Rotterdam, and its U.S. unit, Lyondell Chemical Co., left Chapter 11 protection April. Zurich-based UBS is Switzerland’s biggest bank.

Kelly Smith, a spokeswoman for UBS, didn’t immediately return a voice-mail message left after regular business hours.

The case is Highland Capital v UBS, 11.1728, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net