Hughes Hubbard Wins Important Motion for Brightwood Capital in Banner Ridge Partners Lawsuit

August 2024 — HHR won a major motion for private investment fund Brightwood Capital in a lawsuit, brought by specialist credit investor Banner Ridge Partners, over a roughly $253 million continuation-fund deal.

Banner Ridge sued Brightwood in April in New York Supreme Court for New York County, alleging that Brightwood reneged on an agreement last year, by which Banner Ridge would invest as much as $253.5 million in a new continuation vehicle. In the suit, Banner Ridge alleges that Brightwood breached the agreement and then improperly terminated the parties’ contract, cutting Banner Ridge out of its investment opportunity. Brightwood denied those allegations and filed counterclaims alleging that Banner Ridge breached the parties’ agreement by failing to exercise reasonable best efforts to close the contemplated transaction and by publicly disclosing Brightwood’s confidential information.

In late April, Banner Ridge filed a motion for a preliminary injunction requiring Brightwood to immediately consummate the terminated transaction. Banner Ridge argued that it is entitled to specific performance of the parties’ contract and that, unless Brightwood immediately closed the transaction, Banner Ridge would suffer imminent, irreparable harm. Brightwood countered that Banner Ridge could not demonstrate a likelihood of success on the merits of its claims and that Banner Ridge’s seven-month delay in bringing its motion demonstrated that it was not at risk of imminent harm.

On Aug. 21, Judge Margaret Pui Yee Chan denied Banner Ridge’s motion for a preliminary injunction in its entirety, finding that Banner Ridge failed to establish a reasonable probability of success on its claims against Brightwood. Because Banner Ridge could not establish that its claims were likely to be successful, Judge Chan did not reach the issue of irreparable harm.

Fara Tabatabai leads the HHR team and argued for Brightwood on the preliminary injunction motion. The team includes Dan Weiner, Chuck Samuelson and law clerk Richard Silverberg.