Summary
This 8-K filing from The Bank of New York Mellon Corporation (BK) reports a significant development regarding a past loan to Sentinel Management Group, Inc. (Sentinel). On January 8, 2016, the Seventh Circuit Court of Appeals overturned a lower court's decision, invalidating BNY Mellon's secured lien on collateral for a $312 million loan made to Sentinel, which filed for bankruptcy in 2007. While the appeal court rejected the trustee's request for equitable subordination, the invalidation of the lien means BNY Mellon now holds an unsecured claim in the bankruptcy proceeding.
Key Highlights
- 1BNY Mellon's secured lien on collateral for a $312 million loan to Sentinel Management Group, Inc. has been invalidated by the Seventh Circuit Court of Appeals.
- 2The court ruling shifts BNY Mellon's status from a secured creditor to an unsecured creditor in the Sentinel bankruptcy.
- 3BNY Mellon expects to record an impairment charge of approximately $170 million pre-tax or $105 million after-tax in the fourth quarter of 2015.
- 4The charge reflects management's estimate of probable losses related to the Sentinel loan.
- 5BNY Mellon intends to seek further review of the Seventh Circuit's decision.