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Law firm Morgan Lewis sued by investment company claiming $12 mln in damages

  • Ex-client Prospect Funds is plaintiff
  • Legislation firm’s loan arrangement work at problem

(Reuters) – New York-dependent Prospect Capital Corp has sued U.S. law business Morgan, Lewis & Bockius in excess of claims it bungled lawful get the job done and triggered the monetary providers firm at minimum $12 million in damages tied to a small business loan it manufactured.

Prospect, publicly traded on Nasdaq, sued Philadelphia-primarily based Morgan Lewis in New York point out court docket, alleging in the Oct. 21 criticism that the agency was liable for professional negligence about its do the job for Prospect on mortgage-associated do the job in 2014.

The enterprise argues in essence that due to the law firm’s negligence it was denied the ability to pursue sure therapies for an alleged breach of a loan settlement. Prospect alleged it was not created conscious a critical provision experienced been “appreciably narrowed” to let yet another financial institution to be paid 1st on a bank loan before it could be.

Representatives from Morgan Lewis on Wednesday did not straight away reply to messages trying to get comment. An attorney for the agency experienced not nevertheless made an physical appearance in the case. Morgan Lewis has more than 2,200 lawyers in offices about the environment.

Prospect is represented by an in-household legal crew, and a lawyer for the corporation declined to comment. A corporate agent from the business did not quickly reply to a concept searching for remark.

Prospect mentioned on its website it has made far more than 375 investments totaling nearly $20 billion of money.

The expenditure company mentioned it experienced labored with Morgan Lewis from 2013 to July 2022, when Morgan Lewis terminated its representation.

The 2014 financial loan central to the lawsuit was a person that Prospect designed to Venio LLC, which provided expert services concerning the recovery of unclaimed residence.

That calendar year, Venio mum or dad Keane Holdings Inc pursued a $12 million personal loan from Silicon Valley Lender, the grievance explained. The lawsuit described Keane as a keeping business with a sole asset, its possession of Venio.

Prospect claimed in its lawsuit that as a situation to consent to the Silicon Valley Bank personal loan, it essential the financial institution, Keane Holdings and Venio “to concur to a personal debt subordination agreement in favor of Prospect.” Prospect, in accordance to its criticism, stated its mortgage to Venio would have to be compensated in complete in advance of Keane could pay the Silicon Valley Bank mortgage.

The criticism said Prospect believed that certain money furnished to Silicon Valley Lender would be topic to a “turnover provision” — and be paid to Prospect. The law firm Kirkland & Ellis represented Keane.

Prospect reported $12 million that Keane paid to Silicon Valley Financial institution should really have been manufactured to Prospect.

Last yr, Prospect sued Silicon Valley Financial institution in Manhattan federal court docket. The circumstance settled in June in phrases that were being not disclosed publicly. The lender is not a defendant in the new lawsuit.

The situation is Prospect Money Corp v. Morgan, Lewis & Bockius, Supreme Courtroom of the Condition of New York, No. 653941/2022.

For Prospect: Adam Burton and Abraham Shaw of Prospect

For Morgan Lewis: No overall look yet

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