UPDATE: Deutsche, BNP Paribas Sue BofA Over $1.7 Billion In Notes
(Updates to add Bank of America comment)
By Chad Bray
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- Deutsche Bank AG (DB) and a unit of BNP Paribas SA (
BNP.FR) separately sued Bank of America Corp. (BAC) Wednesday, alleging that the
bank has failed to repay about $1.7 billion in secured notes issued by a
special-purpose entity.
The breach-of-contract lawsuits, filed in U.S. District Court in Manhattan,
allege that Bank of America has failed to redeem $480.7 million in secured notes
held by BNP Paribas and $1.2 billion held by Deutsche Bank.
The notes were issued by Ocala Funding LLC, a special-purpose entity that
provided short-term liquidity funding to Taylor, Bean & Whitaker Mortgage Corp.
pending the sale of mortgages to the Federal Home Loan Mortgage Corp., or
Freddie Mac.
Bank of America acted as collateral agent, custodian, indenture trustee and
depositary for the notes, according to the lawsuits.
In its lawsuit, BNP Paribas said TBW's offices were raided by federal agents
in August and the company was delisted as an approved seller of mortgages to
Freddie Mac, triggering an event of default and making the notes immediately
due.
TBW filed for bankruptcy-court protection in August.
Deutsche Bank made its initial investments in the notes in December 2007. BNP
Paribas made its investment in June 2008.
In August, Bank of America sued Colonial BancGroup Inc. in U.S. District Court
in Miami, seeking to freeze $1 billion in assets. Colonial, which filed for
bankruptcy protection in August, was TBW's main creditor.
In a statement Wednesday, a Bank of America spokesman said the bank shares the
concerns of Deutsche Bank and BNP Paribas about the handling of funds by TBW and
has been "actively pursuing recoveries" in the Colonial and TBW bankruptcy
proceedings.
"BNP and Deutsche Bank's effort to hold Bank of America responsible, however,
is misguided," the spokesman said. "We fulfilled our contractual obligations in
our limited administrative role with respect to the Ocala facility, and will
vigorously defend ourselves in court."
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
(END) Dow Jones Newswires
11-25-091421ET
Copyright (c) 2009 Dow Jones & Company, Inc.
|