Thou Shall Not Interfere with Special Purpose Entities’ Contractual Obligations
“A recent decision of the New York Court of Appeals, Sutton v. Pilevsky held that federal bankruptcy law does not preempt state law tortious interference claims against non-debtors who participated in a scheme that caused a debtor—in this case a bankruptcy remote special purpose entity—to breach contractual obligations intended to ensure that the entity remains a Special Purpose Entity (SPE) and to facilitate the lenders’ enforcement of remedies upon a future bankruptcy filing, if any,” discusses Dechert LLP in their Knowledge blog.
“The ruling likely has significant implications for structured finance providers and may have broader implications as well. Interestingly, in this case the defendants were strangers to SPE financing; after all, the sponsor and its related persons are usually subject to liability on the loan under standard bad acts carve-out guaranty, making it unnecessary to sue them for causes of actions outside the scope of their guaranty.”
