BANKS FACE $2 BILLION LAWSUIT FOR LOAN NON-PAYMENT
NEW YORK - Citigroup, Goldman Sachs and Deutsche Bank have been handed a lawsuit for $2.25 billion from the US Bankruptcy Court after Solutia - a nylon and plastics producer - filed a suit accusing them of failing to provide an agreed loan to protect it from bankruptcy. The banks explained their withdrawal of support as a reaction to credit market turbulence.
Solutia claims market conditions were already volatile before the banks signed their commitment and alleges to have been misled, saying they agreed to finance the loan themselves if they failed to syndicate it. Solutia said if the banks will not finance the loan they should be held accountable for "fraudulently inducing" Solutia to agree to it. Goldman and Deutsche issued no comment, while Citigroup says the lawsuit is without merit and maintains it has complied with contractual obligations.
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