Order to Dismiss Pursuant to 362 (a) of the Judicial Code – Second Circuit

Two years ago when the Northern Trust reorganized its portfolio holdings in the UK, there were rumors that some of their investments in Spain would be targeted in a lawsuit. Now, it appears that this rumor may not have any basis in fact. According to the press release from the Bank of England in September of last year: “A review of the activities of the chief executive and the investment management teams has found no evidence that Northern Trust is planning any moves to tighten Spain. The chief executive and investment management teams continue to work closely with all our customers to ensure that they are sustainable and profitable.”

This statement seems to leave the impression that byerly was involved in an arbitration in an attempt to settle the disputes between the trust and Spain.

But the fact remains that no arbitration or other dispute resolution process was mentioned. Therefore, the original claim is likely true, and that denial is a misrepresentation by the defendant. The original complaint, barely complaint and request for preliminary injunction, is one of several actions on behalf of the complainants in the Northern Trust lawsuit. In other words, it is a case of what you know being false, as implied by the defendants in the original action.

However, the chief judge of the second circuit, Mr. Justice Michael E. Jacobs, went on to opine in his memorandum opinion: “It is unnecessary to resolve these issues before trial.

No longer is trial required because the reorganization is duly executed and the reorganization is final. There is no need to resolve what should have been a preliminary injunction at trial because the reorganization is final. The reorganization therefore does not offend the interests of anyone but the parties. Further, given the foregoing conclusion, I find that there is no reason to preclude the plaintiffs’ ability to file their complaint and seek equitable relief based upon the facts of the case. Accordingly, I dismiss the complaint against the defendant.”

While the opinion of the chief judge was not particularly helpful, it was largely in support of the plaintiffs’ position.

The court accordingly granted a motion to dismiss pursuant to section 360(a) of the Judicial Code. Because this dismissal is subject to an automatic stay, it necessarily bars the plaintiffs from instituting any action in the future unless they can show cause why an injunction should not be issued, including the plaintiffs’ claim that the defendants were in default of their loan agreement.

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