(Bloomberg) — Oaktree Capital Management LP sued BJ’s Wholesale Club Inc. for allegedly backing out of a deal to sell its rights to around $29 million in tariff refunds for 70 cents on the dollar.
In a suit filed Monday in New York, Howard Marks’ asset management giant said BJ’s walked away from a binding agreement with Oaktree because “the market value” of its tariff claim had increased above their agreed sale price.
“This is a case about unlawful and bad-faith seller’s remorse,” Oaktree said in its suit. BJ’s didn’t immediately respond to a message seeking comment.
The dispute highlights the surging value of tariff refund claims amid growing optimism that importers will actually get some money back. Many of President Donald Trump’s global trade levies were struck down by the US Supreme Court in February. Shortly after the ruling, refund claims were trading above 40 cents on the dollar, up from 10-to-20 cents at the beginning of the year.
Oaktree claims it had a “fully negotiated” final agreement on March 13 to pay BJ’s $20 million for its tariff refund claim. All that remained for the deal to be implemented was for the members’ club warehouse retailer to use all “commercially reasonable efforts to execute and deliver” the agreement back to Oaktree, according to the suit.
An in-house lawyer for BJ’s advised Oaktree on April 14, a day after the target date for execution, that it was “all set with internal approvals on our side,” the suit alleges. But that changed a day later when the same lawyer sent another email.
“Apologies, but please ignore my prior email,” the BJ’s lawyer allegedly wrote. “I jumped the gun and there is an issue with getting final approval that we need to work through. I’ll be in touch as soon as I have more info.”
The lawyer wrote later on April 15 to say BJ’s was exercising a Walk Away provision in the contract. Oaktree claims this was never intended to be “a oneway cancellation option.”
The scramble for refunds started immediately after the Supreme Court ruling. The 6-3 decision didn’t address the question of refunds, leaving it to the lower courts to hash out.
Last week, Customs and Border Protection launched an online portal for importers to seek refunds of $166 billion in tariffs that Trump implemented under the International Emergency Economic Powers Act, or IEEPA. The Supreme Court found the president exceeded his powers under the act.
Refunds could start rolling in for thousands of importers in the next few months.
–With assistance from Irene García Pérez.
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