Lawyers for the Connecticut state pension fund have asked a judge to throw out a jury’s July 1 verdict that New York buyout shop Forstmann Little & Co does not owe the pension damages for breach of contract.
According to The New York Post, the $20 billion pension fund has asked Judge Samuel Sferrazza to “either set aside the jury’s decision and allow a new trial, or permit damages notwithstanding the verdict.” The motion would also allow the state’s legal team more time to file a formal appeal to the ruling. Currently, the deadline is set for July 21.
Earlier this month, the jury ruled that Forstmann Little had violated its contract with Connecticut’s pension fund by investing too much money in telecom firm XO Communications from its 1997 fund, in which Connecticut was an investor. In addition, it concluded that the buyout house had made an improper investment in McLeodUSA, another telecom business. The investments were made between 1999 and 2001.
However, the jury decided that no compensation was due to Connecticut because it had ‘acquiesced’ with Forstmann Little’s decision to acquire the stakes and also because the buyout firm had relied on legal advice when making the investments.
Connecticut treasurer Denise Nappier had sought $120 million in compensation: equivalent to the amount the fund lost when the tanking investments were written off.
Forstmann Little made a $1.5 billion loss on XO – the largest ever made from one deal by an LBO firm.