JPMorgan, Citigroup Lose Bid to Move $2 Billion TMST Suit

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Banks including JPMorgan Chase & Co. and Citigroup Inc., sued for $2 billion by Thornburg Mortgage Inc. for allegedly helping it fail, lost a bid to move the case from bankruptcy court to district court as a Maryland judge said almost all the issues could be decided in bankruptcy court.

The trustee for what is now TMST Inc. accused the banks last year of extracting more than $700 million of margin and interest payments from the former Thornburg by making “unjustified” margin calls. The banks, including Credit Suisse Group AG, Royal Bank of Scotland Plc and UBS AG, or their affiliates, said three of the 31 counts involved allegations of breach of contract and fraudulent conveyance, which a bankruptcy judge can’t rule on.