Compass Lexecon Client Cerberus Awarded $856 Million in Damages

Cerberus Capital Management, (“Cerberus”) a prominent private equity firm, filed a breach of contract action against the Canadian Imperial Bank of Commerce (“CIBC”) based on two complex structured finance transactions. The reference assets in these transactions consisted of credit fault swaps, collateral debt obligations and residential mortgage-backed securities.

Kirkland & Ellis LLP and Selendy Gay Elsberg PLLC – counsel for Cerberus – retained Compass Lexecon affiliate Professor Allen Ferrell of Harvard University to estimate damages resulting from the breach of contract. Professor Ferrell testified over the course of two days at the March 2022 trial that damages owed to Cerberus were in the range of $761 million to $1.067 billion (with the range reflecting different interpretations of various contractual provisions). The opposing theory was that significant damages were owed by Cerberus to CIBC.

After finding a breach of contract, Justice Cohen of the New York Supreme Court Commercial Division entered judgment on February 6, 2023 for Cerberus in the amount of $856 million (with damages accruing at a 9% interest rate going forward).

Professor Ferrell was supported by professionals in our New York office. Compass Lexecon worked closely with Judson Brown of Kirkland & Ellis and Philippe Selendy of Selendy Gay Elsberg PLLC, who were the lead attorneys for Cerberus.