Bloomberg reports that Solus sued Perry July 3rd for $20m after the trade fell apart, saying they had a legally enforceable deal, sealed by phone and 'instant messages' on Bloomberg LP terminals. Perry denied there was a deal, 'let alone one that can be enforced in court'.
In a bankruptcy, a trader can’t get paid without a signed document showing the seller 'unconditionally and irrevocably' sold, transferred and assigned the claim, with all rights attached. Under New York State contract law, trillions of dollars in debt trade telephonically with a confirmation by e-mail or on electronic systems such as a Bloomberg terminal.
'A contract for the sale of debt doesn’t have to be in writing', said Robert E. Scott, a professor at Columbia Law School in New York. 'There are no statutory bars to enforcement if there was a meeting of minds and a final understanding'.
The fight between the hedge fund firms comes as prices for larger claims on the con man’s estate have climbed to about 65 cents on the dollar, from the low 60s, according to Joseph Sarachek, Managing Director of claims trading at CRT Capital Group LLC, which buys and sells distressed debt. Solus claims that Perry backed off from the trade because it 'apparently realized that it made a bad deal' and was 'suffering a case of seller’s remorse'.
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