Bloomberg.com: News
Dec. 2 (Bloomberg) -- Billionaire investor Carl Icahn sued Leon Black‘s Realogy Corp. over claims the company’s planned $1.1 billion debt exchange is a fraudulent transfer of money that will only delay its inevitable failure.
Icahn’s High River Limited Partnership, owner of Realogy’s so-called pay-in-kind toggle bonds, said it will be unfairly pushed behind other noteholders in the exchange. Realogy, the Parsippany, New Jersey-based owner of Coldwell Banker and Century 21 brands, is asking bondholders to swap the securities for new debt at a discount as it battles the worst housing crisis since the Great Depression.
Realogy “is not entitled to re-shuffle its capital structure by violating its contractual obligations to the toggle noteholders and engaging in transfers that are fraudulent as to its credits generally,” High River said in the complaint filed Nov. 26 in Delaware Chancery Court.
The suit pits two of the top private-equity investors, who used to work together on deals in the 1980s, against each other. Black was Icahn’s investment banker at Drexel Burnham Lambert.
“A year ago the idea that private-equity firms would be suing each other and investment banks would be ludicrous,” said Adam Cohen, founder of Covenant Review LLC in New York, a debt research firm that analyzes corporate bond terms. “It’s another step in ‘Every man for himself.’ Investors are worried about surviving, not relationships.”
‘Deeply Insolvent’
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