Biglaw, Screw-Ups

Simpson Thacher Sued In Two Class Actions

Biglaw firm allegedly cost lenders big bucks.

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Simpson Thacher found itself on the wrong side of a litigation when it was named in a pair of putative class action suits. The twin filings, brought on behalf of more than 400 lenders, claim that Simpson Thacher and J.P. Morgan negligently authorized the termination of the security interest in a $1.5 billion bankruptcy loan to General Motors LLC.

These suits come after the Second Circuit earlier held that filing of the termination statement ended the term loan security interest. Which was news to the term loan lenders, as none of them agreed to the release of the term loan security interest. Since the Second Circuit told them to pound sand, they’ve decided to go after the lawyers who put them in this bind.

As Law360 reports:

J.P. Morgan served as the administrative agent on the 2006 loan to GM and had an obligation to the syndicate of lenders to maintain and monitor the loan collateral. But in 2008, the bank and its counsel, Simpson Thacher, overlooked erroneous Mayer Brown LLP documents and filed an incorrect termination statement releasing the loan’s security interest, according to the suits.

The suits claim malpractice and professional negligence and negligent misrepresentation against Simpson Thacher.

There’s not much else to say at this point. We’ve asked Simpson Thacher if they care to comment and will update this story accordingly if they respond.

In the meantime, if you’d like to read either or both of the complaints, they’re available on the next pages…

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Simpson Thacher, JPMorgan Sued Over $1.5 Billion GM Loan [Law360]

Earlier: Mayer Brown & Simpson Thacher Make Epic Screwup

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