Callidus Capital Corp., the distressed debt lender run by billionaire Newton Glassman, is battling with three of its borrowers who say the Canadian firm pushed them to breach loan terms to get control of assets ranging from coal mines to a ship recycler, Bloomberg News reported yesterday. The case offers a glimpse into the combative world of distressed lending, with Callidus suing its former clients for breaking loan agreements, alleging that funds were diverted in one case, and claiming theft in another. The borrowers fired back with counterclaims seeking more than C$300 million ($224 million) in combined damages. They say that Callidus changed the terms of the loans, required personal guarantees that weren’t part of the original discussions, withheld funds, and ultimately caused them to default or go into receivership. The three lawsuits are tied to Callidus loans to Bentley, Alberta-based well specialist Alken Basin Drilling Ltd.; Texas-based ship recycler Esco Marine Inc.; and Kentucky-based coal company Fortress Resources. The cases are being heard in Alberta, Ontario, and Texas. Callidus, a subsidiary of Catalyst Capital Group Inc., Canada’s second-largest private equity firm, has built up a C$1.2 billion loan book specializing in companies that can’t access traditional lending.
