Certainly not $175 million to pay aggrieved investors money they won at arbitration.

James Dondero and his hedge fund Highland Capital Management have a lot of experience when it comes to the legal system, enough to earn an honorary law degree or at least election as president of the United States. (Although it should be noted that the current litigious occupant of that office hates Dondero so much he actually sided with his wife in the divorce.) Alas, as any such veteran of courtrooms and arbitration hearings knows, you can’t win’em all, and in this case it’s looking very much like Highland has lost its fight with the investors who sued it for freezing their assets during the financial crisis, promising three years later to pay them back in another three years, failing, and then getting fired by those same investors, who kept suing Highland all the same. By which we mean a judge has asked Highland to respond to the “partial final award” issued against it in March by an arbitration panel, specifically about paying up. And since a Highland lawyer who we very much would not want to be right now forgot to redact it, it’s looking like Highland could be on the hook for as much as $175 million.

Now, Highland and Dondero have no more intention of paying that amount than he had of paying his ex-wife any more than it said in the prenup. Dondero went as far to declare himself insolvent under Texas law in spite of continuing to earn “one million, two” a year. Now Highland, which has $15 billion in assets, is trying the same thing.

In the affidavit, the lawyer, Scott Hellington, notes the $175 million figure is “for the purposes of this affidavit” and that Highland “did not have cash, cash equivalents, or immediately liquid assets equal to the amount of the partial final award.” That language was meant to be blacked out, according to a separate filing asking the court to retroactively redact the original document. That request was denied.

Highland Says It Lacks Cash to Pay Clients $175 Million Now [Bloomberg]