By Allison Lampert and Jonathan Stempel
NEW YORK (Reuters) - A New York state judge on Friday rejected an attempt by Bombardier Inc to dismiss a lawsuit by a group of hedge funds that accused the business jet maker of short-changing them by selling new debt after divesting major businesses in 2020 and 2021.
Justice Andrew Borrok of the Manhattan Supreme Court said the hedge funds did not waive their right to declare Bombardier in default on their bonds, part of a $250 million issuance maturing in 2034, when it sold the businesses, including its commercial aircraft program.
The hedge funds Antara Capital Master Fund, Corbin ERISA Opportunity Fund and Corbin Opportunity Fund sued Bombardier last January, after the company sold an additional $260 million of the bonds to another investor.
That sale gave the investor a majority of the now $510 million issuance, and it voted to waive the default.
The three hedge funds said it had no right to do that. They claimed that the default required Bombardier to pay them $398 million, including outstanding principal plus the present value of future interest payments.
Borrok dismissed some of the plaintiffs' claims but said they could replead them.
Bombardier did not immediately respond to requests for comment.
Duane Loft, a partner at Pallas Partners who represents the plaintiffs, said: "We're pleased that the court interpreted the indenture to mean what it says - that these new notes don't count for purposes of waving the past default."
Bombardier now focuses mainly on private jets. Its rivals include Gulfstream jet maker General Dynamics Corp and Cessna jet maker Textron Inc.
The case is Antara Capital Master Fund LP et al v Bombardier Inc et al, New York State Supreme Court, New York County, No. 650477/2022.
(Reporting by Allison Lampert in Montreal and Jonathan Stempel in New York; Additional reporting by Maiya Keidan in Toronto; editing by Grant McCool)