December 30, 2019
NY Suit Against Tilton To Go Forward After Failed Appeal
Law360 (December 17, 2019, 6:12 PM EST) — A New York state appeals court sent a German bank’s fraud suit against Lynn Tilton and her investment fund toward a likely trial Tuesday after upholding a lower court’s denial of Tilton’s summary judgment motion.
In a short decision from the New York Supreme Court’s Appellate Division, a panel of four justices unanimously confirmed the denial of Tilton’s earlier bid for summary judgment of the $54 million suit brought by Norddeutsche Landesbank Girozentrale, saying questions of fact must be resolved in the case.
Nord/LB bought $135 million in notes from two collateralized debt obligation funds, known as the Zohar funds, run by Tilton in the lead-up to the financial crisis of 2008-09, according to court records. But the German bank said it learned when the U.S. Securities and Exchange Commission opened a case against Tilton that it had been misled about how its money was being used, leading it to sell the Zohar notes and take a loss of over $45 million.
The bank’s suit says that it was misled by Tilton about the equity components of the Zohar funds and that it relied on those misrepresentations when purchasing the notes.
Nord/LB attorney Michael M. Fay of Berg & Androphy PC said his client was happy about the decision and was looking forward to presenting its case at a trial scheduled for September 2020.
“This is a case for trial, not for summary judgment,” Fay told Law360.
Representatives for Tilton did not immediately respond Tuesday to a request for comment.