TORONTO — CIBC says it has entered into an agreement to settle a lawsuit filed against it by private equity firm Cerberus Capital Management LP.
The company says it’s agreed to pay US$770 million to Cerberus to fully settle the lawsuit, including the most recent judgment of a New York court.
Earlier in January, a New York court decision found the Canadian bank liable for damages in the lawsuit, and at the time CIBC said it disagreed with the basis for the court’s decision and planned to appeal.
The lawsuit was filed in November 2015 and concerned an October 2008 transaction where CIBC issued a limited recourse note to Cerberus specifying certain payment streams, and a 2011 transaction where CIBC sold a residual interest in the streams to the firm.
CIBC says it recorded a pre-tax provision of CAD$1.17 billion related to the settlement in its first-quarter 2023 results, which will be released on Feb. 24.
The bank says there’s a difference of US$85 million between the provision and the settlement amount, which will be reflected in its second-quarter results.
This report by The Canadian Press was first published Feb. 17, 2023.
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