Western Alliance (WAL) says in 8K it has been informed by Jefferies (JEF) that USD 126.4mln owed under forbearance pact won't be paid as agreed; firm files complaint vs Jefferies and Leucadia Asset management alleging breach of contract and fraud
- The complaint is related to commercial loan collateralized by accounts receivable purchased from First Brands.
- Wester Alliance says financial impact substantially mitigated through realization of securities sale gains, expense reductions.
- The company plans to offset the charge through USD 50mln in securities gains, of which ~USD 45mln have been realized quarter-to-date, and USD 50mln in expense reductions. Management said the actions should provide an aggregate offset of USD 100mln.
Context
Western Alliance's filing reveals a serious dispute with Jefferies regarding a promised payment under a forbearance agreement, which they claim hasn't been honored. The financial impact appears managed, with the firm offsetting potential losses through realized securities gains and cost reductions totaling around USD 100 million. This situation, particularly the allegations of breach of contract and fraud, could affect market perceptions of Western Alliance's stability and investor confidence in similar financial arrangements.
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