A federal judge ruled that the court-appointed trustee overseeing the liquidation of Thornburg Mortgage Inc. can move forward with a lawsuit against Barclays Capital Inc. alleging the bank made improper margin calls that helped drive the mortgage lender into bankruptcy.
Judge Ellen Lipton Hollander of the U.S. District Court in Baltimore said the trustee can sue BarCap, the investment banking division of British bank Barclays PLC, for at least $94 million over the margin calls, and subsequent seizure and sale of the mortgage-backed securities that Thornburg financed through BarCap. She dismissed, however, the trustees' claim that the bank acted in bad faith. BarCap spokeswoman Kerrie-Ann Cohen did not comment on the ruling.
The decision is a victory of sorts for Joel I. Sher, the bankruptcy trustee overseeing the liquidation, who is also suing Goldman Sachs Group. In that case, Sher is seeking $71 million from Goldman for what he says was the improper seizure of mortgage-backed securities that Thornburg had pledged to Goldman as collateral.
The trustee is also suing some of the biggest players in Wall Street's mortgage finance assembly line for nearly $2 billion, claiming a number of banks — including JPMorgan Chase & Co., Citigroup Inc. and Credit Suisse Group — engaged in series of "collusive" and "predatory" schemes that resulted in Thornburg’s demise. The banks, in court papers, have denied wrongdoing.