#United States #New York #Wilmington Trust #J.C. Penney #Barnett U.S. Equity Fund

Barnett U.S. Equity Fund Files Lawsuit Against Wilmington Trust and UMB Bank

In a significant legal move, the Barnett U.S. Equity Fund LP has brought forth a lawsuit in the Commercial Division of the Supreme Court in New York. This action is directed against Wilmington Trust, National Association, and UMB Bank, N.A., focusing on serious allegations tied to the handling of bondholder protections during the tumultuous Chapter 11 bankruptcy proceedings of J.C. Penney.

This lawsuit centers on a substantial sum of $333.3 million relating to First and Second Lien publicly traded bonds. The crux of the complaint highlights breaches in contract obligations that are meant to protect the collateral securing these bonds. Barnett U.S. Equity Fund contends that the defendants compromised the collateral without adhering to critical conditions outlined in the governing indentures, pledge agreements, and intercreditor agreements.

The governing agreements stipulated the necessity of delivering, reviewing, and verifying Officer's Certificates and, when pertinent, Opinions of Counsel to confirm compliance before any collateral release could occur. According to the allegations, Wilmington Trust is accused of relying too heavily on broad lien-release language found in the Chapter 11 plan, rather than executing the necessary checks through the Officer's Certificates and Opinions of Counsel that are mandatory according to the governing agreements.

Moreover, Barnett asserts that UMB Bank failed to verify whether it had procured and relied upon the essential Officer's Certificates and Opinions, ignoring repeated requests to ensure compliance. This lack of adherence to protocol is claimed to have left investors vulnerable, compromising the value connected to their investments in the bonds.

The lawsuit is not a challenge to the legitimacy of the restructuring transactions that took place under the Bankruptcy Court's rulings. Instead, it seeks restitution in response to what Barnett alleges were the defendants’ negligent failures to meet their obligations when managing the collateral amidst the bankruptcy process.

Andrew Carrillo, the Fund Manager of Barnett U.S. Equity Fund LP and President of Barnett Capital Advisors, remarked on the lawsuit, stating, "This lawsuit aims at seeking damages for alleged breaches of mandatory contractual protections tied to publicly traded bonds. Our allegations underline that specific provisions were required to be met prior to releasing collateral. While Wilmington claims to have relied on the Chapter 11 plan, this was in clear violation of the required contractual certifications. Such failures could have caused significant monetary harm to bondholders involved in this case."

As the lawsuit stands, it encompasses claims for breach of both the First and Second Lien Indentures, alongside breaches of the applicable pledge and security agreements and the associated intercreditor agreements. Barnett U.S. Equity Fund seeks compensatory damages as well as other remedial actions permissible under the New York law and the governing contracts.

This legal case is officially titled Barnett U.S. Equity Fund LP v. Wilmington Trust, National Association and UMB Bank, N.A., with an index number of 654724/2026, located in the Commercial Division of the Supreme Court of the State of New York, County of New York. Individuals interested in the formal complaint can access it through the public docket.

About Barnett U.S. Equity Fund

Barnett U.S. Equity Fund LP is a registered Delaware limited partnership managed by Barnett Capital Advisors, adhering to SEC regulations. The fund primarily invests in publicly traded securities and actively works towards safeguarding its legal and contractual interests associated with these investments. This announcement serves merely for informational purposes and is not an offer for the sale or solicitation of any securities or investment interests. Additional resources and information can be found at Barnett Capital Advisors.