By Robb M. Stewart


Canadian Imperial Bank of Commerce on Wednesday said it plans to appeal a New York court ruling finding the bank liable for damages expected to total about US$848 million in a lawsuit brought by a special purpose vehicle controlled by Cerberus Capital Management LP.

CIBC said it strongly disagrees with the legal and factual basis for the court's decision, released late Tuesday, finding the bank liable for damages of US$491 million plus pre-judgement interest that is currently being assessed by both parties. The court had issued a liability ruling in the matter against the bank on Dec. 2.

The Canadian lender said it expects to record an after-tax provision of about 850 million Canadian dollars (US$621.7 million) in its first-quarter results, and for the charge to result in an about 0.3 percentage point reduction in its common equity Tier 1 capital ration, which stood at 11.7% at the end of last October.

In November 2015, Cerberus filed a suit against CIBC alleging default on certain payments. The suit related to a 2008 transaction in which the bank issued a limited recourse note to the U.S. private equity firm specifying certain payment streams to Cerberus in exchange for an investment and a subsequent deal in 2011 in which CIBC sold a residual interest in the payment streams to Cerberus. Cerberus at trial claimed damages of about US$1.07 billion, including pre-judgement interest at the time.

CIBC hadn't set aside a provision for the legal matter in its year-end Oct. 31 financial statements.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

01-04-23 0844ET