On May 21, 2020, the Ramsey County District Court ordered U.S. Bank, as trustee of a residential mortgage-backed securities trust, to use trust assets to pursue litigation against Goldman Sachs entities concerning thousands of mortgages in the trust that defaulted. The use of trust assets was opposed by an entity affiliated with Lone Star Funds, which held a large senior position in the trust. AWC Fund LLC argued that the litigation should go forward for the benefit of the trust certificateholders as a whole, that it was both contractually required and fair that trust assets be used, and that Lone Star had a conflict of interest by virtue of an alignment with the interests of Goldman Sachs. The court balanced the interests of certificateholders, noting that it was “troubled” by the conflict of interest.
Greene Espel attorneys John Orenstein and Holley Horrell handled the case for AWC.