(Toronto) CIBC has announced that it has reached an agreement to settle the lawsuit filed by private equity firm Cerberus Capital Management LP.
The bank says it has agreed to pay Cerberus US$770 million to fully settle the lawsuit, including the most recent judgment from a New York court.
Earlier in January, a New York court ruling found the Canadian bank liable for damages in the lawsuit. At the time, CIBC said it disagreed with the basis of the court’s decision and planned to appeal.
The lawsuit was filed in November 2015 and related to an October 2008 transaction in which CIBC provided limited recourse financing to Cerberus that specified certain series of payments, as well as a 2011 transaction in which CIBC sold a right residual in the series of specified payments.
The bank says it recorded a C$1.17 billion pre-tax provision related to the settlement in its first-quarter 2023 results, to be released Feb. 24.
It says the $85 million difference between the amount recorded in the first quarter of 2023 results and the settlement amount will be reflected in its second quarter results.