On October 28, the New York Supreme Court, Appellate Division – First Department affirmed the dismissal of claims brought by a defaulting borrower against its lender, Siemens First Capital Commercial Finance LLC*, in Whitecap (US) Fund I LP v. Siemens First Capital Commercial Finance LLC,Index No. 650888/12. Siemens declared a default and initiated remedies after its borrower failed to meet a contractual deadline for consummating an initial public offering (IPO) that was intended to generate capital to repay the loan. The borrower sued, claiming Siemens wrongfully contributed to its failure to meet the deadline by, among other things, allegedly failing to provide required approvals for the IPO. The borrower also alleged that Siemens continued to negotiate with the borrower past the deadline and waived its right to enforce the default.

The Appellate Division unanimously rejected the borrower's arguments and affirmed the dismissal of the complaint. In a ruling that should give comfort to secured lenders seeking to negotiate with their borrowers despite a pending default, the Appellate Division found that, even if Siemens' actions could theoretically constitute a waiver, the agreement's non-waiver clause protected and preserved Siemens' enforcement rights.

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