Urbi Asks Court to Dismiss Barclays Suit Over DerivativesChris Dolmetsch
Urbi Desarrollos Urbanos SAB, a Mexican real-estate developer, asked a court in New York to dismiss a suit filed by Barclays Plc over financial derivatives.
Barclays’s Mexican unit sued Urbi for breach of contract in New York State Supreme Court in Manhattan last month, 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.
“This action is based entirely on a transaction between two Mexican companies that is governed by English law,” Urbi said in a court filing dated today. “Contrary to BBMex’s jurisdiction allegations, the parties did not agree that New York law would govern the transaction at issue and did not agree to submit to the jurisdiction of the New York courts with respect to that transaction. There is simply no basis, in contract or otherwise, for this court to exercise jurisdiction over Urbi in this case.”
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 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.