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Carlson Lynch Files Complaint Seeking In Excess Of $250 Million In Insurance Coverage As Part Of Rescap Bankruptcy Settlement

By Carlson Lynch On February 4, 2015

On February 4, 2015, Carlson Lynch filed a complaint in the Southern District of New York Bankruptcy Court asserting claims based upon the assignment of insurance rights to the class as part of the Kessler class action settlement. Bruce Carlson is co-lead counsel for the Kessler Class. In the Kessler settlement—which was also prosecuted in the bankruptcy court in the Southern District of New York—Rescap (the debtor in bankruptcy) agreed to pay the Kessler Class an allowed claim amount of $300 million to settle allegations that second mortgage loans made to the class included inflated fees as a result of an illegal kickback scheme. Currently, it is expected that the allowed claim amount settlement of $300 million will yield a payment of approximately $38 million dollars from the debtor to the Kessler Settlement Class. This coverage action that was filed by Carlson Lynch on February 4th seeks to recover the difference between the $38 million that will be paid to the Kessler Class by the debtor and the $300 million allowed claim amount that was negotiated in the settlement. The defendants in the coverage action include Lloyd’s of London, Twin City Fire Insurance and Swiss Re International, SE, among others.