Thornburg Mortgage – Seeks Court Approval Of $23.5 million Settlement with RBS Defendants

September 28, 2018 – The U.S. Trustee assigned to the Thornburg Mortgage case requested Court approval of a settlement between the U.S. Trustee and RBS Defendants [Docket No. 2736]. The Trustee explains, “On April 30, 2011, the Trustee filed a Complaint (as amended on June 8, 2011) against the RBS Defendants and JPMorgan Chase Funding Inc. (as successor to Bear Stearns Investment Products Inc.), Citigroup Global Markets Limited, Citigroup Global Markets, Inc., Credit Suisse Securities (USA) LLC, Credit Suisse International, and UBS AG (collectively, and excluding the RBS Defendants, the ‘Non-Settling Defendants’) in the Bankruptcy Court, Adversary Proceeding Number 11-0340-NVA (the ‘Adversary Proceeding’). In the Complaint, the Trustee set forth claims for, inter alia, avoidance of certain transfers made to the RBS Defendants (as well as transfers made to the Non-Settling Defendants) under 11 U.S.C. § 548(a)(1)(A) and breach of contract (including the RBS Defendants’ liquidation of the Debtors’ MBS collateral in connection with certain of the RBS Financing Agreements). In an effort to resolve the claims asserted against the RBS Defendants and the Proofs of Claim filed by the RBS Defendants, the Trustee and RBS engaged in arms-length, good faith negotiations. As a result of those negotiations, the Parties reached an agreed upon settlement. The settlement relates solely to the RBS Defendants and does not affect the Trustee’s claims, demands, causes of action, and rights against the Non-Settling Defendants in the Adversary Proceeding or the Debtors’ bankruptcy case…the key terms of the Settlement Agreement include: The RBS Defendants will pay to the Trustee Twenty-Three Million Five Hundred Thousand Dollars ($23,500,000) (the ‘Payment’) for the benefit of the Debtors’ estates; Within three (3) business days after receipt of the Payment by the Trustee, the Parties shall file with the Bankruptcy Court a stipulation of dismissal, dismissing the RBS Defendants as defendants in the Adversary Proceeding with prejudice; Upon receipt of the Payment by the Trustee, the Proofs of Claim and any and all claims of RBS of any kind whatsoever against the Debtors shall be deemed automatically disallowed and expunged in the Bankruptcy Case”