CIBC ‘disputes’ liability ruling in Cerberus matter, intends to appeal

CIBC announced that a New York court issued a liability ruling against CIBC late in the afternoon on December 1, in a lawsuit brought by a special purpose vehicle controlled by Cerberus Capital Management L.P. The court has not determined any damages against CIBC and will hear the parties’ arguments on damages at a hearing to be held on December 19. CIBC disputes the liability ruling and intends to appeal. The lawsuit, filed by Cerberus in November 2015, relates to an October 2008 transaction in which CIBC issued a limited recourse note to Cerberus specifying certain payment streams, and a subsequent transaction in 2011 in which CIBC sold a residual interest in the specified payment streams to Cerberus. At trial, Cerberus claimed damages of $1.067B. CIBC will vigorously dispute Cerberus’ measure of damages at the hearing on December 19. CIBC had not set aside a provision for this matter in its year-end October 31 consolidated financial statements as it believed it was more likely than not to prevail at trial, but included a material amount for the matter in the range of reasonably possible losses for legal claims disclosed in aggregate in its consolidated financial statements. CIBC expects to recognize a provision in its first quarter 2023 results, the estimate of which will be informed by developments during the quarter.