RKS Achieves Win on Second Circuit Appeal for Client Appaloosa Management and Other CMBS Investors

No items found.
August 8, 2022

On July 14, 2022, the United States Court of Appeals for the Second Circuit issued a decision agreeing with RKS that tens of millions of dollars in profits from the sale of a New York City commercial property should be distributed to investors (represented by RKS) in the commercial mortgage-backed securities (“CMBS”) trust that held the mortgage on the property, rather than retained by a service agent responsible for administering the property.  In December 2015, the Peter Cooper Village and Stuyvesant Town (“Stuy Town”) was sold for over $5 billion.  The mortgage loans on Stuy Town were held by various CMBS trusts in which RKS clients invested.  Although the Second Circuit Court of Appeals found that the special servicer was entitled to retain some portion of the profits, it also found that the special servicer improperly failed to remit a significant amount to investors.  As a result of the Second Circuit’s decision, the case has been remanded to trial court to determine what portion of the $67 million at issue should be returned to CMBS investors.