Highland, which sued Citigroup and Babson Capital Management in April, filed a notice of dismissal of the complaint Thursday in U.S. District Court in Dallas. The filing doesn’t give a reason for the dismissal.
Highland said this week that it would continue to manage the Liberty CLO after exercising a provision in the indenture allowing it to buy some of the riskiest portions, the so-called equity piece, of the fund from Babson and Citigroup.
Stefan Prelog, a spokesman for Highland, had no immediate comment on the dismissal. Scott Helfman, a Citigroup spokesman, declined to comment.
In May 2011, Citigroup, the underwriter of the CLO, approached Highland about liquidating the fund, Highland said in court papers. Some CLOs allow a deal to be called if the majority of the investors in the equity portion vote to do so.
Citigroup would have made gains from the transaction as it had purchased positions in the fund at a discounted price, according to Highland.
After Highland refused to liquidate the fund, Citigroup sought to remove the firm and replace it with Babson, which also owned a piece of the CLO’s riskiest portion, according to Highland’s filing.