Some more color:
"
Situation Summary
We attended a Status Conference at SDNY this morning between legal
representatives for Syncora and Macquarie Bank. On Aug 15th, Judge
Ostrager had ordered both sides to engage in settlement negotiations and
report back at today’s hearing. No settlement was reached, though the
clerk did set July 11 as a tentative trial date. She mentioned on several
occasions that Judge Ostrager views this case – dating back to 2012 – as
old and that they would like to stay on schedule. Though we have never
valued this litigation as highly as other R&W putback cases - it essentially
amounts to a fraud claim and proving justifiable reliance is always a
challenge - we view the commitment to reaching trial in July next year as a
positive in that any recoveries should be realized in the next 12-18 months
(assuming trial date is pushed out and a ruling is required).
Two other interesting wrinkles were discussed today. The first is the
possibility that Macquarie might want to open up discovery on the
American Roads sales process once it is completed. Although not
conclusive, the clerk overseeing today’s meeting appeared doubtful that
broad discovery would be allowed. The second is that plaintiffs appear to
be looking for a jury trial. In our view, this should increase the pressure on
Macquarie since a complicated jury trial would create more media
interest and public awareness – can you imagine the jury selection
process? – than a bench ruling by one judge.
Background on Macquarie Litigation
The heart of the litigation is summarized in one paragraph of Syncora’s
2012 complaint: “American Roads’ dismal performance has been of no
great surprise to defendants. This is so because to justify American Roads’
massive debt load, and to induce Syncora into insuring payments related
to that debt, defendants procured fraudulently inflated projections of
traffic volumes and revenue at American Roads’ toll facilities. Prepared by
Macquarie’s longtime collaborator, Maunsell Australia Pty Ltd.
(“Maunsell”), those projections showed that the toll roads in American
Roads’ portfolio would experience high volumes of traffic that would
result in an ever-growing stream of revenue. Unbeknownst to Syncora at
the time, however, those projections were not prepared in good faith and
according to prevailing industry standards but were instead, with
defendants’ complicity, specifically engineered and inflated to
misrepresent American Road’s revenues as adequate to cover its debt
service.” Maunsell subsequently changed its name to AECOM in 2009, and
has been the focus of considerable litigation since that time, including a
2015 settlement for AUD280mm."
