Canadian Imperial Bank of Commerce (CM) has agreed to pay Cerberus Capital Management $770 million U.S. to settle a long-standing lawsuit that dates back to the 2008 financial crisis.
The Cerberus lawsuit, which was originally filed in 2015, accused CIBC of defaulting on payments related to a limited recourse note that the bank issued to Cerberus to reduce its exposure to the U.S. residential real estate market.
CIBC issued the note in 2008 and sold a residual interest in the specified payment streams to Cerberus in 2011.
Privately held Cerberus had claimed damages of $1.07 billion U.S. in the case.
The settlement amount is $85 million U.S. less than CIBC had set aside to cover damages and prejudgment interest after a court ruled against the bank in the legal matter.
CIBC said that it will record the difference between its initial provision and the actual settlement amount in its fiscal second quarter of this year.
CIBC’s stock is down 23% over the last year at $62.52 per share.
