CIBC Agrees To Pay US$770 Mln To Settle Cerberus Capital Lawsuit

(RTTNews) - CIBC (CM, CM.TO) said that it has reached an agreement to settle a lawsuit filed by a private equity firm Cerberus Capital Management LP. against CIBC including the most recent judgment of the New York Court.

As per the settlement agreement, CIBC has agreed to pay US$770 million to Cerberus in full satisfaction of the judgment, and both parties have agreed to arrange for the immediate dismissal, with prejudice, of all claims, counterclaims and appeals relating to the litigation.

The parties have also agreed to mutual releases in respect of the matter. The settlement also eliminates the uncertainty, distraction and expense of continued litigation between the parties, CIBC said.

CIBC recorded a pre-tax provision of C$1.17 billion in its first quarter 2023 results to be released on February 24, 2023, representing damages and pre-judgment interest totaling US$855 million through January 31, 2023.

CIBC noted that the US$85 million difference between the amount recorded in the first quarter 2023 results and the settlement amount will be reflected in its second quarter results.

CIBC said in January that it plans to appeal the New York Court decision released after close of business on January 3, 2023 finding CIBC liable for damages in the lawsuit brought by Cerberus Capital in the amount of US$491 million, plus pre-judgment interest that is currently being assessed by both parties. CIBC had disagreed with the legal and factual basis for the Court's decision.