Goldman Sachs Group Inc. doesn’t have to face Capmark Financial Group Inc.’s $147 million lawsuit claiming it was improperly influenced by the bank to refinance $1.5 billion in unsecured debt in a way that improved its position as a creditor, a judge said.
U.S. District Judge Robert Sweet in Manhattan yesterday ruled that Capmark, which sued Goldman in 2011, can’t recover the money. Horsham, Pennsylvania-based Capmark claimed the sum was an insider preference paid to Goldman within a year of the Capmark bankruptcy.
Sweet said Capmark can’t claim the presence of a Goldman employee on its board means that the New York-based bank must return the $147 million because that argument contradicts its earlier position in the bankruptcy case.
“Plaintiffs represented to the Delaware bankruptcy court that the secured credit facility was negotiated at ‘arm’s length,’” Sweet said in a decision made public today. “Plaintiffs now assert a claim that requires the secured credit facility to have been a non-arms-length transaction.”
Capmark, the commercial lender once a part of the former General Motors Corp., exited bankruptcy in September 2011, co-owned by lower-ranking creditors, some of whom fought in bankruptcy court with Goldman Sachs over the refinancing and the payments to the bank.
Capmark claimed that while the bank owned part of it in May 2009, a group of Goldman Sachs units used their influence to persuade Capmark to refinance $1.5 billion in unsecured debt owed the firm. The refinancing allowed Goldman Sachs to collect $147 million, including $7 million in cash, based on the new secured loan, according to the lawsuit.
Adam Shiff, a lawyer for Capmark, didn’t immediately return a voice-mail message seeking comment on Sweet’s ruling.
Capmark filed bankruptcy on Oct. 25, 2009, blaming falling property values and a drop in lending.
The case is Capmark Financial Group Inc. v. Goldman Sachs Credit Partners LP, 11-cv-07511, U.S. District Court, Southern District of New York (Manhattan).