CALDERWOOD & HARKNESS LLP Attorneys at Law 425 Lexington Avenue New York, New York 10017 Telephone: (212) 558-4000 Facsimile: (212) 558-3588 www.calderwoodharkness.com
May 15, 2024
Via Email and Overnight Courier
Harrison Whitfield III, Esq. Whitfield, Drummond & Paige LLP 51 West 52nd Street New York, New York 10019
Re: Response to Reservation-of-Rights Letter Dated May 10, 2024 — SkyLend Receivables Trust 2024-1 / Halcyon Securities LLC (Deal Reference: HLC-ABS-2024-017)
C&H Matter No. 1009-00005
Dear Mr. Whitfield:
I. Introduction and Purpose
Calderwood & Harkness LLP represents Skybridge Fintech Ltd., a Delaware corporation ("SBF" or "Skybridge"), in connection with the above-referenced matter. We write in response to the reservation-of-rights letter dated May 10, 2024 (the "RoR Letter"), sent by your firm, Whitfield, Drummond & Paige LLP ("WDP"), on behalf of your client, Halcyon Securities LLC ("Halcyon"), in connection with the terminated securitization of consumer receivables through SkyLend Receivables Trust 2024-1 (the "Trust" or "SRT 2024-1").
SBF has carefully reviewed the RoR Letter, including each of the claims and positions articulated therein. After thorough analysis of the governing agreements, the relevant factual record, and the applicable law, SBF respectfully but firmly disagrees with Halcyon's characterization of its entitlements and the legal and factual bases for its asserted claims. While SBF shares Halcyon's disappointment that the SRT 2024-1 transaction could not proceed to closing, the circumstances giving rise to the termination were not of SBF's making, and Halcyon's attempt to transform a contractually limited expense-reimbursement right into an expansive claim for consequential and speculative damages is without merit.
This letter sets forth SBF's position with respect to the following matters: (i) the limited scope of Halcyon's contractual remedies under the Preliminary Purchase Agreement dated February 20, 2024 (the "PPA"); (ii) SBF's objections to Halcyon's assertion of damages beyond the amounts expressly provided under the governing agreements; and (iii) SBF's preservation of its own rights and remedies, including potential counterclaims arising from the circumstances of this matter. We address each of these matters in turn below.
II. Background and Transaction Summary
We begin by setting forth the relevant background and transactional history, as an accurate understanding of the facts is essential to the proper analysis of the parties' respective rights and obligations.
On February 20, 2024, SBF and Halcyon entered into the PPA, pursuant to which Halcyon was engaged as sole bookrunning manager and initial purchaser for a proposed $200,000,000 Rule 144A / Regulation S private placement of asset-backed notes (the "Notes") to be issued by the Trust and secured by a pool of unsecured consumer installment-loan receivables originated through SBF's proprietary SkyLend digital lending platform (the "Offering"). The proposed capital structure for the Offering consisted of $170,000,000 in Class A Notes (representing approximately 85% of the total issuance), $22,000,000 in Class B Notes (representing approximately 11% of the total issuance), and an $8,000,000 residual interest (representing approximately 4% of the total issuance) to be retained by SBF through its wholly owned subsidiary, SkyLend Funding LLC, in satisfaction of applicable risk-retention requirements. The PPA provided for an underwriting discount of 1.00% of the aggregate principal amount of the Notes, or $2,000,000, which was expressly contingent upon the closing and settlement of the Offering.
Following the execution of the PPA, the parties and their respective advisors undertook significant efforts to prepare for the Offering. A Preliminary Offering Memorandum dated April 5, 2024 (the "Preliminary OM") was prepared and distributed to prospective investors on a preliminary, indicative, and subject-to-change basis. An investor roadshow was conducted from April 15 through April 19, 2024, during which Halcyon's sales and trading personnel, together with representatives of SBF, presented marketing materials and the Preliminary OM to twenty-eight (28) institutional investors across multiple sessions.
On April 22, 2024, Broadleaf Analytics Group LLC ("Broadleaf"), the independent loan-level due diligence provider engaged by Halcyon itself pursuant to standard market practice, identified material discrepancies between the static-pool performance data set forth in the Preliminary OM and the actual underlying loan-tape records maintained by Clearview Loan Servicing, Inc. ("Clearview"), the third-party servicer retained by SBF under the Master Servicing Agreement dated October 1, 2022, between SBF and Clearview (the "MSA"). Broadleaf's findings, as subsequently confirmed by SBF's internal review, established that the discrepancy was attributable to a software error introduced during Clearview's June 2023 migration from its legacy "LoanTrax" servicing system to its "ClearCore" platform. Specifically, the ClearCore migration caused Clearview to apply partial payments to principal before interest, in direct contravention of the contractual payment-application waterfall prescribed by Section 4.03 of the MSA.
The practical consequence of this servicing-system error was significant. With respect to 30+ day delinquency rates for the proposed receivables pool, the Preliminary OM reported a rate of 3.21%, whereas the actual rate — calculated using properly waterfall-ordered payment applications — was 5.47%, representing a 2.26 percentage point discrepancy and a 70.4% relative increase. With respect to cumulative net losses for the 2022 origination vintage (the primary vintage in the proposed pool), the Preliminary OM reported a cumulative net loss rate of 4.12%, whereas the actual rate was 6.89%, representing a 2.77 percentage point discrepancy and a 67.2% relative increase. These discrepancies affected approximately 14,600 loans, constituting approximately 63.2% of the proposed receivables pool by loan count.
The consequences of these findings for the Offering were immediate and severe. On April 26, 2024, Halcyon delivered a notice to SBF invoking the force-majeure and material-change provisions of the PPA and suspending all marketing activities in connection with the Offering. On April 29, 2024, Carrollton Ratings Group LLC ("Carrollton") placed its expected ratings on the Class A Notes and Class B Notes on "developing" watch. On May 1, 2024, Meridian Credit Ratings, Inc. ("Meridian") withdrew its preliminary ratings on the Notes entirely. Following a meeting of the SBF Board of Directors on May 3, 2024, at which the Board considered the full scope of the data-integrity issues, the rating-agency actions, and the estimated timeline and cost of remediation, SBF formally terminated the Offering and the PPA by written notice to Halcyon on May 8, 2024.
It is against this factual backdrop that Halcyon's RoR Letter must be evaluated.
III. Halcyon's Contractual Remedies Are Limited to the Express Terms of the PPA
A. The PPA Governs the Parties' Rights Upon Termination
The PPA, which is governed by New York law pursuant to Section 12(a) thereof, is the exclusive agreement between the parties governing the terms of Halcyon's engagement as initial purchaser for the Offering. The PPA sets forth, in comprehensive detail, the respective rights and obligations of the parties with respect to the proposed transaction, including the conditions to closing, the representations and warranties of the parties, and — critically for present purposes — the consequences of a termination of the transaction prior to closing.
It is undisputed that the PPA was only partially executed in the sense that it governed the pre-closing relationship between the parties. The transaction never closed. No Notes were issued or sold. No final purchase agreement was consummated. No proceeds were disbursed. The parties' relationship with respect to the Offering is therefore governed entirely by the terms of the PPA as they apply to a pre-closing termination, and not by any implied-in-fact contract, quasi-contractual theory, or other extra-contractual doctrine.
Accordingly, Halcyon's rights upon termination of the Offering are exclusively governed by the termination provisions of the PPA, including, in particular, Section 7 thereof.
B. Section 7(b) Expense Reimbursement Is Halcyon's Sole Monetary Remedy
Section 7(b) of the PPA provides, in relevant part:
"Upon termination of the Transaction by the Issuer or the Company for any reason prior to the Closing Date, the Company shall reimburse the Initial Purchaser for its reasonable, documented out-of-pocket expenses incurred in connection with the Offering, including without limitation fees and disbursements of counsel to the Initial Purchaser, travel expenses, and other customary transaction-related expenses; provided that such expenses shall not exceed such amounts as are reasonable under the circumstances."
The RoR Letter asserts that Halcyon's documented out-of-pocket expenses total $387,500. SBF acknowledges that the expense-reimbursement provision of Section 7(b) of the PPA has been triggered by SBF's termination of the Offering on May 8, 2024, and SBF does not dispute at this time that the aggregate amount of $387,500, as stated in the RoR Letter, is within the range of reasonable expenses that Halcyon may have incurred. SBF is prepared to honor the $387,500 expense-reimbursement obligation promptly upon receipt of reasonable documentation supporting those expenses, as further discussed in Section VII below.
However, Section 7(b) represents the full extent of Halcyon's monetary entitlements upon termination. The PPA does not provide for any additional compensation, fee, or payment to Halcyon in the event of a pre-closing termination.
C. No Break-Up Fee or Additional Compensation Was Agreed
The PPA does not contain a break-up fee, termination fee, reverse break fee, or any similar provision entitling Halcyon to compensation beyond documented out-of-pocket expenses upon termination of the Offering. This was not an oversight or a drafting gap. To the contrary, the absence of such a provision reflects the deliberate allocation of termination risk between the parties as negotiated and agreed. During the negotiation of the PPA, Halcyon was represented by sophisticated counsel — indeed, by your firm — and had every opportunity to negotiate for a break-up fee or termination payment. No such provision was proposed or agreed.
The underwriting discount of 1.00%, or $2,000,000, was expressly contingent upon the closing and settlement of the Notes. Section 3(a) of the PPA states clearly that the underwriting discount shall be "payable to the Initial Purchaser out of the proceeds of the sale of the Notes at the Closing." No closing occurred, no Notes were sold, no proceeds were generated, and therefore no underwriting discount is owed.
Halcyon's assertion in the RoR Letter that it is entitled to damages for "lost revenue opportunity" in the amount of the foregone underwriting discount, as well as unquantified "reputational harm," finds no support in the express terms of the PPA and is contrary to the fundamental structure of the parties' agreement. The PPA allocated the risk of a failed pre-closing transaction by providing Halcyon with the limited remedy of expense reimbursement — not by guaranteeing Halcyon's expected profits from the Offering under all circumstances.
Under well-established New York law, a party may not recover consequential or speculative damages where the contract expressly limits the available remedies. See Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 22 N.Y.3d 799, 806 (2014) (enforcing contractual limitation on remedies); Metropolitan Life Ins. Co. v. Noble Lowndes Int'l, Inc., 84 N.Y.2d 430, 436 (1994) (holding that consequential damages are not recoverable where the contract provides an exclusive remedy). The PPA's Section 7(b) expense-reimbursement provision constitutes the exclusive financial remedy available to Halcyon in these circumstances, and Halcyon may not bootstrap a claim for expectation damages or lost profits onto a contract that expressly limits its recovery to documented out-of-pocket expenses.
D. The Force-Majeure / Material-Change Provisions Do Not Create Independent Damage Claims
Halcyon's April 26, 2024, notice invoked the force-majeure and material-change provisions of the PPA (Sections 8(a)(iv) and 8(a)(vi), respectively) as the basis for suspending marketing of the Offering. These provisions are protective in nature: they afford each party the right to suspend or terminate its obligations under certain specified circumstances, including the occurrence of a material adverse change in the condition, financial or otherwise, of the collateral or the issuer, or the occurrence of an event beyond the reasonable control of the parties that renders the transaction impracticable.
Critically, these provisions are protective termination rights — they provide a contractual mechanism for an orderly wind-down of the transaction in the event of unforeseen material developments. They are not affirmative causes of action giving rise to independent damage claims. Nothing in Sections 8(a)(iv) or 8(a)(vi) provides that the non-invoking party shall be liable for damages, lost profits, or any other compensation to the invoking party beyond the expense reimbursement already provided for in Section 7(b).
Moreover, to the extent Halcyon itself could have terminated the PPA under these provisions — as Halcyon's own April 26, 2024, notice suggested it had the right to do — Halcyon cannot simultaneously claim that SBF's subsequent formal termination on May 8, 2024, constitutes a breach entitling Halcyon to damages beyond the agreed expense reimbursement. Halcyon cannot have it both ways: it cannot invoke its own right to terminate while simultaneously characterizing the other party's termination as a breach. The legal inconsistency of this position is plain, and it should be abandoned.
IV. Halcyon's Claims for Additional Damages Are Without Merit
A. Lost Revenue Opportunity
The RoR Letter asserts that Halcyon suffered "lost revenue opportunity" in the amount of $2,000,000, representing the foregone underwriting discount. This is a claim for expectation damages — a claim that Halcyon should be placed in the position it would have occupied had the Offering closed — that was expressly not bargained for in the PPA. As discussed in Section III.C above, the underwriting discount was contingent on closing, and the PPA did not guarantee Halcyon's right to earn the fee under all circumstances.
Even setting aside the contractual limitations, Halcyon's lost-revenue claim fails on the merits. The servicing-data discrepancy discovered by Broadleaf Analytics — Halcyon's own due diligence provider — rendered the transaction impossible to close in its then-current form. The delinquency and loss data underpinning the capital structure, the credit enhancement levels, the rating-agency models, and the investor marketing materials were materially inaccurate. Both Meridian and Carrollton took adverse rating actions. The Offering could not have been consummated without a complete re-underwriting, re-pooling, and re-marketing process that Halcyon itself estimated would require eight (8) to twelve (12) weeks — a timeline that would have pushed the transaction into the summer low-volume period and fundamentally altered the economics and feasibility of the Offering.
Halcyon itself acknowledged the impossibility of proceeding by suspending marketing on April 26, 2024. Having itself recognized that the Offering could not close, Halcyon cannot now claim that SBF's formal termination on May 8, 2024, deprived Halcyon of revenue it was entitled to receive. The revenue was contingent on an event — the closing — that could not have occurred regardless of which party formally terminated the transaction.
B. Reputational Harm
Halcyon's claim for "reputational harm" is speculative, unquantified, and unsupported by any contractual provision, evidentiary record, or recognized legal theory. The RoR Letter does not quantify the alleged reputational damages, does not identify any specific investor relationship that was damaged, and does not articulate any basis upon which such damages could be calculated with the reasonable certainty required under New York law. See Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261 (1986) (holding that damages must be capable of proof with reasonable certainty and may not be speculative or contingent).
Moreover, the factual predicate for a reputational-harm claim is absent here. No securities were sold to investors. The Preliminary OM was distributed on a preliminary, indicative, and subject-to-change basis, as is plainly stated on its cover page and in the customary disclaimers contained therein. The transaction was terminated before pricing, before allocations, and before any investor committed capital. Investors who received the Preliminary OM and attended the roadshow understood — as all sophisticated institutional investors in the 144A market understand — that preliminary materials are subject to revision and that transactions may not proceed to closing.
Furthermore, Halcyon itself bears responsibility for the management of its investor relationships. The pre-closing discovery of the data discrepancy — rather than a post-closing discovery — reflects the proper functioning of the due diligence process that Halcyon itself initiated by engaging Broadleaf Analytics. The identification of material data issues before any Notes were sold is precisely the outcome that the due diligence process is designed to achieve. Far from constituting a reputational injury, the pre-closing termination of a transaction based on identified data-integrity concerns demonstrates the integrity and rigor of the underwriting process. Any suggestion to the contrary reflects a fundamental misunderstanding of the purpose and operation of pre-closing due diligence in the structured finance markets.
C. No Basis for Fraud, Negligent Misrepresentation, or Indemnification Claims
To the extent the RoR Letter implies potential claims sounding in fraud, negligent misrepresentation, or common-law deceit, SBF notes the following.
The data discrepancy at the heart of this matter was caused by a third-party servicer error at Clearview Loan Servicing, Inc. — specifically, a software defect introduced during Clearview's migration from its LoanTrax system to its ClearCore platform in June 2023. The error was not the result of any intentional, reckless, or negligent misconduct by SBF. SBF relied in good faith on the servicing data provided by Clearview, which Clearview was contractually obligated to provide accurately, completely, and in conformity with the payment-application waterfall specified in Section 4.03 of the MSA.
SBF had no knowledge of the Clearview data error at the time the static-pool performance data was compiled for inclusion in the Preliminary OM or at the time representations were made in connection with the Offering. SBF's representations regarding pool performance were made based on data received from Clearview, and SBF's reliance on that data was reasonable under the circumstances. A claim for fraud or negligent misrepresentation requires, at a minimum, that the alleged misrepresentor knew or should have known that the representations were false. See Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 178 (2011); Hydro Investors, Inc. v. Trafalgar Power Inc., 227 F.3d 8, 20 (2d Cir. 2000). No such showing can be made here.
With respect to indemnification, SBF's indemnification obligations under Section 10 of the PPA do not extend to losses caused by third-party servicer errors that were unknown to SBF at the time the relevant representations were made. Section 10(a) of the PPA limits SBF's indemnification obligations to losses arising from "a breach of any representation, warranty, or covenant of the Company contained in this Agreement." SBF's representations concerning pool performance data were made to the best of SBF's knowledge based on information provided by the servicer, and were qualified accordingly. Furthermore, any indemnification claim under the PPA would be subject to the conditions precedent, procedural requirements, limitations on liability, and notice provisions set forth in Section 10, none of which have been satisfied by Halcyon as of the date of this letter.
V. Halcyon's Own Contributory Awareness of Data-Quality Risks
SBF notes, as an additional matter, that Halcyon, as a sophisticated institutional participant in the asset-backed securities market with extensive experience in the origination, structuring, and distribution of consumer-receivables securitizations, was fully aware of the inherent data-quality risks associated with transactions of this nature. Indeed, Halcyon specifically took steps to mitigate those risks by engaging Broadleaf Analytics Group LLC to perform independent loan-level due diligence and re-underwriting with respect to the proposed receivables pool.
Broadleaf was engaged by Halcyon on March 25, 2024, and was tasked with performing a stratified random sample re-underwriting of 1,500 loans — representing approximately 6.5% of the proposed pool by loan count — in accordance with standard industry practice for consumer-receivables asset-backed securities transactions. Halcyon's engagement of Broadleaf was not merely a box-checking exercise; it reflected Halcyon's own understanding, consistent with prevailing market standards and regulatory expectations, that originator- and servicer-provided data is inherently subject to verification and may contain discrepancies, inaccuracies, or errors.
The due diligence process functioned exactly as intended. Broadleaf identified the discrepancy between Clearview's reported static-pool data and the actual loan-tape records, and Broadleaf reported those findings to Halcyon on April 22, 2024 — before any Notes were priced, allocated, or sold, and before any investor had made a binding commitment. The transaction was thereafter appropriately terminated in an orderly fashion. This is precisely the outcome that the due diligence process is designed to achieve, and it is the very outcome that Halcyon contracted for when it engaged Broadleaf.
Halcyon cannot claim to have been harmed by a risk that it specifically anticipated, contracted to address through its own independent due diligence process, and ultimately identified and mitigated before any harm to investors could occur. To the extent Halcyon now asserts that it has suffered damages as a result of the data discrepancy, that assertion is fundamentally inconsistent with the fact that Halcyon's own due diligence infrastructure performed its protective function and prevented the very harm that Halcyon now claims to have suffered.
VI. Preservation of SBF's Rights and Potential Counterclaims
A. Reservation of All Rights
SBF expressly reserves all of its rights, remedies, claims, and defenses under the PPA, under applicable law (including, without limitation, the laws of the State of New York), and in equity, whether arising from the matters discussed herein or otherwise, whether known or unknown, whether currently existing or hereafter arising. Nothing in this letter, and no action taken or omitted by SBF or its counsel, shall be construed as a waiver, relinquishment, or estoppel of any right, claim, or defense available to SBF, or as an admission of any fact, liability, or obligation, except as expressly stated herein.
B. SBF's Potential Counterclaims
Without prejudice to the foregoing reservation of rights, and without limiting SBF's rights in any respect, SBF notes that it may have counterclaims against Halcyon arising from the circumstances of this matter, including, but not limited to, the following:
(a) Marketing Conduct Claims. Claims arising from the timing and manner of Halcyon's dissemination of the Preliminary Offering Memorandum to twenty-eight (28) institutional investors during the roadshow conducted from April 15 through April 19, 2024, including whether Halcyon's marketing activities were conducted with adequate attention to the preliminary and unverified nature of the static-pool performance data contained in the Preliminary OM, whether Halcyon adequately disclosed the preliminary character of the data to prospective investors, and whether Halcyon's marketing presentations were consistent with the disclaimers and limitations set forth in the Preliminary OM.
(b) Delayed Notification Claims. Claims arising from Halcyon's delay in communicating Broadleaf's findings to SBF. According to the record, Broadleaf notified Halcyon of the data discrepancy on April 22, 2024; however, Halcyon did not notify SBF of Broadleaf's findings until April 23, 2024 — a delay of approximately one business day during which Halcyon was in possession of material adverse information concerning the collateral pool and the integrity of the data in the Preliminary OM. SBF reserves the right to investigate whether this delay was reasonable, whether it resulted in any additional exposure or liability for SBF, and whether it constituted a breach of Halcyon's obligations under the PPA.
(c) Contribution and Indemnification Claims. Any claims for contribution, indemnification, or subrogation in the event that SBF incurs liability to any investors, rating agencies, or other third parties arising from the distribution of the Preliminary Offering Memorandum, the conduct of the roadshow, or any other activities undertaken by Halcyon in connection with the Offering.
SBF reserves the right to assert these and any other counterclaims at the appropriate time and in the appropriate forum, and nothing in this letter shall be construed as a limitation on SBF's right to do so.
C. Clearview Indemnification Proceedings
SBF further notes that it is currently pursuing indemnification claims against Clearview Loan Servicing, Inc. under Section 9.02 of the MSA for losses arising from Clearview's breach of its data-accuracy representations and warranties and its failure to apply payments in accordance with the contractual waterfall prescribed by Section 4.03 of the MSA. SBF's total sunk transaction costs incurred as a result of the termination of the Offering are approximately $1,779,150, consisting of the following:
SBF's estimated claim against Clearview ranges from $1,500,000 to $3,000,000, inclusive of direct transaction costs, consequential damages, and reputational damages attributable to the servicing-system error. SBF has engaged separate litigation counsel to pursue these claims and anticipates initiating formal proceedings against Clearview in the near term.
To the extent Halcyon contends that it has suffered damages beyond the expense reimbursement provided under Section 7(b) of the PPA — which, as discussed above, SBF disputes — its appropriate recourse may be against Clearview Loan Servicing, whose servicing error was the proximate cause of the data discrepancy, the rating-agency actions, the suspension of marketing, and ultimately the termination of the Offering. SBF encourages Halcyon to consider its own potential claims against Clearview in connection with any losses Halcyon believes it has sustained.
VII. Demand for Documentation of Expenses
As stated above, SBF acknowledges its obligation under Section 7(b) of the PPA to reimburse Halcyon for its reasonable, documented out-of-pocket expenses incurred in connection with the Offering, and SBF is prepared to satisfy that obligation in a timely and good-faith manner.
SBF requests that Halcyon submit detailed, itemized documentation supporting its $387,500 expense-reimbursement claim within thirty (30) days of the date of this letter (i.e., on or before June 14, 2024). Such documentation should include, at a minimum:
(i) detailed invoices from WDP and any other outside counsel engaged by Halcyon in connection with the Offering, redacted as necessary to preserve attorney-client privilege but sufficiently detailed to permit SBF to assess the reasonableness of the charges and their connection to the Offering;
(ii) receipts and invoices for travel, lodging, and roadshow expenses incurred by Halcyon's personnel in connection with the investor roadshow conducted from April 15 through April 19, 2024;
(iii) invoices and receipts for any other out-of-pocket costs claimed by Halcyon as reimbursable expenses under Section 7(b); and
(iv) a summary schedule itemizing each expense by category, date incurred, payee, and amount.
SBF reserves the right to dispute any expense that is not reasonable, not adequately documented, or not within the scope of reimbursable expenses as defined by Section 7(b) of the PPA. Upon receipt of satisfactory documentation, SBF will process payment of the validated reimbursement amount within thirty (30) days.
VIII. Request for Cessation of Unsubstantiated Claims
SBF respectfully but firmly requests that Halcyon and WDP refrain from asserting claims for damages beyond the $387,500 expense reimbursement provided under Section 7(b) of the PPA absent a good-faith legal and factual basis for such claims. The claims articulated in the RoR Letter for "lost revenue opportunity" and "reputational harm" are, for the reasons set forth in detail above, without contractual support, without evidentiary foundation, and contrary to applicable New York law.
SBF remains willing to engage in good-faith discussions with Halcyon and its counsel to resolve any outstanding matters between the parties in an efficient and constructive manner. SBF has no desire to protract this dispute unnecessarily, and believes that the prompt submission of expense documentation and payment of the Section 7(b) reimbursement amount should bring the financial aspects of the parties' relationship to an orderly conclusion.
However, SBF will vigorously defend against any claim that lacks contractual or legal support. In the event that Halcyon chooses to pursue claims for damages beyond the Section 7(b) reimbursement amount — whether through litigation, arbitration, or any other proceeding — SBF will not hesitate to seek all available relief, including sanctions under 22 NYCRR Part 130 or Rule 11 of the Federal Rules of Civil Procedure, attorney's fees, and any other fee-shifting or cost-shifting remedies available under applicable law. SBF trusts that such measures will not be necessary.
IX. No Admission; Privileged Communication
This letter is written without prejudice and does not constitute an admission of any fact, liability, or obligation on the part of SBF, except as expressly stated herein — specifically, SBF's acknowledgment of its expense-reimbursement obligation under Section 7(b) of the PPA in the stated amount of $387,500, subject to receipt of reasonable supporting documentation as described in Section VII above. No statement in this letter shall be construed as an acknowledgment of the validity of any claim asserted or reserved in the RoR Letter, or as an admission that any damages have been suffered by Halcyon.
This letter is protected by the attorney-client privilege and the work-product doctrine to the extent applicable under law. However, as this letter is intended for delivery to opposing counsel and addresses the merits of claims asserted by Halcyon, SBF acknowledges that the letter may be used in subsequent proceedings as appropriate and does not assert any privilege that would preclude such use.
We trust that the foregoing sets forth SBF's position clearly and comprehensively. Should you wish to discuss the matters addressed in this letter, or should Halcyon wish to arrange a meeting to resolve the outstanding issues between the parties, please do not hesitate to contact the undersigned directly.
Linda Osei, Partner Calderwood & Harkness LLP 425 Lexington Avenue New York, New York 10017 Telephone: (212) 558-4127
Email: losei@calderwoodharkness.com
We look forward to your prompt response and to the timely resolution of this matter.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Linda Osei Partner
425 Lexington Avenue New York, New York 10017
cc (via email):
Tomás Reyes, Esq., General Counsel, Skybridge Fintech Ltd., 1400 Market Street, Suite 1210, Wilmington, DE 19801
Arun Mehta, Chief Executive Officer, Skybridge Fintech Ltd., 1400 Market Street, Suite 1210, Wilmington, DE 19801
Danielle Prescott, Chief Financial Officer, Skybridge Fintech Ltd., 1400 Market Street, Suite 1210, Wilmington, DE 19801
Theodore Langston, Partner, Calderwood & Harkness LLP, 425 Lexington Avenue, New York, NY 10017
Patrick Gallagher, Associate, Calderwood & Harkness LLP, 425 Lexington Avenue, New York, NY 10017
Rebecca Thornton, Managing Director, Halcyon Securities LLC, 200 Vesey Street, 42nd Floor, New York, NY 10281
Jonathan Kramer, Head of ABS Origination, Halcyon Securities LLC, 200 Vesey Street, 42nd Floor, New York, NY 10281
Encl: None
Expense Category | Payee / Description | Amount
Halcyon expense reimbursement (§7(b) PPA) | Halcyon Securities LLC | $387,500
Rating-agency fees — Meridian | Meridian Credit Ratings, Inc. | $185,000
Rating-agency fees — Carrollton | Carrollton Ratings Group LLC | $160,000
Due diligence fees | Broadleaf Analytics Group LLC | $225,000
Issuer's counsel partial fees | Rowland & Cross LLP | $137,500
Trustee prorated fee | Keymark Trust Company, N.A. | $3,750
Paying agent acceptance fee | Atlantic Fiduciary Services LLC | $15,000
Calderwood & Harkness legal fees | Calderwood & Harkness LLP | $623,400
Printing costs | Donnovan Press, Inc. | $42,000
Total | $1,779,150