Assignee Lacked Standing; Assignment of Right to Pursue Remedies on Notes Did Not Transfer Claims

On September 15, 2016, the First Department issued a decision in Cortlandt St. Recovery Corp. v. Hellas Telecom., S.à.r.l., 2016 NY Slip Op. 06051, holding that a plaintiff lacked standing to assert claims because the assignment of the right to pursue remedies under notes did not constitute the assignment of claims, explaining:

The [IAS] court correctly found that plaintiff Cortlandt Street Recovery Corp. lacks standing to bring the claims in Index Nos. 651693/10 and 653357/11 because, while the assignments to Cortlandt for the PIK notes granted it "full rights to collect amounts of principal and interest due on the Notes, and to pursue all remedies," they did not transfer "title or ownership" of the claims.

The court correctly found in Index No. 653181/11 that Cortlandt lacks standing because the party that gave it the assignment to sue on the subordinated notes did not have the authority to assert or assign such claims, having never obtained status to sue as a holder of definitive notes or otherwise. While that party has the court-ordered right to the issuance of definitive notes that would give it the right to sue or assign to Cortlandt its right to sue, and the issuer of the subordinated notes violated the indenture and the court order by not issuing such notes, the court correctly declined, on the facts alleged, to use the doctrine of substitute performance to alter the terms of the indenture so as to remedy this situation.

(Internal citations omitted).