Court Confirms Hedge Funds Did Not Act In Bad Faith, Affirms Large Judgment

In Good Hill Master Fund L.P. v. Deutsche Bank AG, No. 600858/10­2188B, 2017 BL 19363 (App. Div. 1st Dep’t Jan. 24, 2017), the Appellate Division, First Department, unani­mously affirmed a judgment entered in the Commercial Division of over $90 million, a large portion of which included prejudgment interest at 21 per­cent. The judgment followed a nonjury trial before Justice O. Peter Sherwood of the New York County Commercial Division. The case was brought by two hedge funds against Deutsche Bank in connection with credit default swap (CDS) agreements. The First Depart­ment rejected the bank’s arguments that the hedge funds acted in bad faith by renegotiating the terms of the under­lying securitized notes to the detriment of their CDS counterparty, Deutsche Bank.

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