Rakoff Ignored Contract Law In CDO Ruling, 2nd Circ. Told

Law360, New York (December 11, 2012, 8:28 PM EST) -- A New Jersey-based financing company argued before the Second Circuit on Tuesday that U.S. District Judge Jed Rakoff disregarded long-standing tenets of contract law in ruling against the company in a dispute over payments tied to failed collateralized debt obligations now held by Bank of America NA.

Loreley Financing No. 8 Ltd. counsel Stephen M. Plotnick said Judge Rakoff had erred in ordering that principal payments on the failed CDOs’ highest-priority “A-1” notes be paid before interest payments due to “A-2” noteholders.

Plotnick argued that Judge...
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