A New York trial judge has let a breach of contract claim brought by former directors at RCS Capital Corp proceed against hedge fund Luxor Capital Partners LP in connection with litigation over RCS Capital's 2016 bankruptcy, Reuters reported. New York Supreme Court Justice Andrew Borrok in Manhattan ruled on Monday that the ex-directors, led by former RCS Capital executive chairman and real estate investment trust pioneer Nicholas Schorsch, can move ahead with a claim accusing Luxor of violating an agreement to waive its right to sue over certain RCS Capital transactions. Borrok dismissed two claims accusing Luxor and one of its senior executives of tortiously interfering with that same agreement by influencing another party to violate the contract too. Schorsch and three other former RCS Capital board members sued Luxor and executive Michael Conboy in New York Supreme Court in May for allegedly inducing a creditor trust to file an action against the former directors, RCS Capital Management and several affiliates in May 2017 in the Delaware Court of Chancery. The trust, called RCS Creditor Trust, filed the complaint over the investment firm’s 2016 bankruptcy and attempts to sell its distribution business. The creditor trust alleged that the former RCS Capital directors used their “virtually unfettered power” to benefit another of their businesses, AR Capital LLC, at RCS’ expense. AR Capital was responsible for creating real estate investment trusts and other investment vehicles and then selling them to affluent individuals, while RCS Capital provided resources to support AR Capital's work, according to the Delaware complaint.
