Deals

Goldman's CDS Dance With Hedge Funds Lands It in New Legal Mess

Suit also names BofA and senior Goldman banker as defendants
Tweaks to grocer deal aided CDS bets, but retailer cites harm

United Natural Foods’ lawsuit is about trust, says the company’s lawyer, Gabriel Soledad of Quinn Emanuel.(Source: Bloomberg)

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By Sridhar Natarajan and Chris Dolmetsch

January 30, 2019 at 8:57 PM UTC

Updated on

January 31, 2019 at 12:00 PM UTC

This article is for subscribers only.

Just three months ago, Goldman Sachs struck an unusual deal with a group of hedge funds to offload a buyout loan from its books -- saving the bank and the funds from potential losses.

Now, that odd arrangement is at the center of a lawsuit accusing the Wall Street firm of gorging on fees while exposing the acquirer in the buyout, United Natural Foods Inc., to hedge-fund sharks who stand to reap gains if it falters. United Natural had hired Goldman Sachs for the takeover and is now demanding at least $52 million -- and potentially much more -- from the bank.