The Goldman Sachs Group, Inc.
) won the dismissal of a lawsuit filed by
Capmark Financial Group Inc.
), which alleged that the U.S. banking major influenced the
company to refinance $1.5 billion in unsecured debt, leveraging
on its presence in Capmark's board as well as its role as a
However, a U.S. District Judge in Manhattan dismissed the lawsuit
on grounds that it was contradictory to the statements made by
Capmark while filing for bankruptcy. Capmark, a real estate
lender, once a unit of
), filed for bankruptcy in Oct 2009. Later, in 2010, in a
settlement of related claims in the U.S. Bankruptcy Court in
Delaware, Capmark argued that the loan refinancing was the result
of an arm's length transaction.
In 2006, Goldman obtained a 74% stake in Capmark, associated with
lending $8.7 billion in credit facilities. It also had a presence
in Capmark's board. In May 2009, Capmark entered into $1.5
billion credit facility to repay a portion of the initial debt.
In the lawsuit, filed in 2011, Capmark alleged that it had paid
Goldman a sum worth $147 million related to the initial loan, a
deal which can be maneuvered by Goldman due to its presence on
the company's board.
We believe the lawsuit dismissal will provide relief to Goldman
as it has been plagued by litigations of late. Further, it is
also expected to reduce the legal expenses of the company.
Goldman is expected to announce its first quarter 2013 results on
Apr 16. The Zacks Consensus Estimate for the quarter is pegged at
$3.74 per share. The Zacks Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) for Goldman is +4.01% for the first quarter. This, along with
its Zacks Rank #3 (Hold), places the company for an expected
Among other major banks,
JPMorgan Chase & Co.
) is also likely to deliver a positive earnings surprise this
quarter as our model shows it has the right combination of
elements - an Earnings ESP of +2.90% and a Zacks Rank #2.
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