Bank of America (NYSE:BAC) was dealt a blow in its $209 million case against Cabi Downtown over whether the firm filed Chapter 11 bankruptcy for the sole purpose from protecting them from foreclosure, which the banking giant and other lenders asserted was the case.
The group of lenders, which was led by Bank of America, say they’re owed $209 million on a construction loan provided to Cabi Downtown’s high-end ‘Everglades on the Bay’ condo project.
What the lawsuit be Bank of America attempted to do was get rid of the bankruptcy protection so they could pursue other legal avenues and recoup some of its money. That won’t happen now as the ruling to keep the bankruptcy in place and to proceed was made by the presiding judge.
Cabi Downtown filed for Chapter 11 protection in August 2009 when the group of lenders pursued foreclosing on the condo building.
In a secondary part of the case where Bank of America may have to pay major bucks for, Isicoff is thinking about imposing sanctions on them because they were found to have lied about Cabi in a separate but related court pleading where the bank attempted to keep Cabi from pursuing its residential leasing program.
What the bank did was try to make it look like the value of the building was being affected by the types of clients Cabi was offering leases to, which they described as people who had been convicted of serious crimes.
According to Judge Isicoff, the bank has admitted that they lied about the circumstances, and she ordered a hearing on February 24 to deal with the proposed sanctions.
Lawyers for Cabi have hinted they may take some legal actions of their own against Bank of America concerning the false allegations, which on their part say could have a negative effect on the building from their assertions.
It’s somewhat incredible to me that Bank of America would put themselves in a position where they could have to pay out millions for provable and admitted lies.
