A group of commercial-mortgage backed securities investors is suing a junior lender and other parties, alleging a "brazen scheme," to steal more than $60 million from bondholders, according to a New York court filing.
The investors, three collateralized debt obligations and TCG Holdings I LLC, hold pieces of a $1.26 billion deal sold by Credit Suisse Group AG in 2007, Royal Bank of Scotland Group PLC analysts led by Richard Hill wrote in a report today. They are seeking to block Galante Holdings Inc. from purchasing a $150 million loan on the J.W. Marriott Summerlin Hotel, Resort, Spa and Casino in Las Vegas, according to the court filing.
"This action seeks to stop in its tracks the brazen scheme of a junior lender who here attempts to steal more than $60 million in value from a group of senior lenders," according to the complaint filed yesterday in New York State Supreme Court in Manhattan. "Galante's bid to seize control of the mortgage loan and abscond with more than $60 million in value, as well as with critical control rights, fails for numerous reasons."
The suit names TriMont Real Estate Advisors as the so- called special servicer. Special servicers, firms that handle troubled property loans packaged into securities, have the option to buy defaulted loans provided the value is deemed fair.
The lawsuit claims that Galante, which owns $10 million in junior debt against the property, "conspired" with the servicer to purchase the debt for less than it's worth, according to the RBS analysts.
"The lawsuit highlights how complicated the fair-value- purchase option can be," Hill, who is based in Stamford, Connecticut, said in a telephone interview.
A message left for Atlanta-based TriMont wasn't returned.
Douglas Rohrer, identified in the complaint as affiliated with Galante and other defendants, didn't answer a call to his cellphone.
The case is Cedarwoods CRE CDO II Ltd. v. Galante Holdings Inc., 11-653624, New York State Supreme Court in Manhattan (New York County).