CarVal and West Asset Management Resolve Legal Dispute

Accounts receivable management firm West Asset Management and investment firm CarVal Investors have resolved a long-running dispute involving debt purchasing activities, according to a press release late Tuesday issued by CarVal.

Investment entities managed by CarVal Investors (CVI) and West Asset Management and its affiliates (WAM) announced that the parties have amicably resolved a dispute and resulting legal proceedings involving investments in consumer receivables portfolios owned by joint ventures of WAM and CVI, which were historically serviced by WAM.

CarVal provides private funding for many debt buyers and collection agencies like WAM to acquire debt portfolios. CarVal is a subsidiary of agriculture giant Cargill and WAM is a unit of call center operator West Corp.

"We are pleased to resolve the disputes with West amicably, allowing both companies to move forward with executing their business plans. Going forward, CarVal Investors is committed to managing investments in consumer loan portfolios and continuing to work with industry-leading servicers,” said Jerry O’Brien, senior partner and head of global loan portfolios for CarVal Investors.

The dispute dates back to at least early 2008, when WAM announced to investors that CarVal allegedly wanted to change the terms of a lending agreement (“WAM to Reduce Debt Buying in 2008 Over Funding Flap,” April 18, 2008).

As part of the settlement, WAM agreed to pay to CVI certain cash consideration, and the parties agreed to end the pending legal proceeding.  WAM and its affiliates did not admit any wrongdoing.

In a filing with the Securities and Exchange Commission in late October, West noted acknowledged the resolution of the dispute. The company said that "as a result of the settlement in the fourth quarter, the portfolio receivables will decrease by $48.7 million (including a decrease of $18.8 million in the current portion and a decrease of $29.9 million in the long term portion)."