Alternative investment company NexPoint Advisors LP faced intense scrutiny Wednesday before the Fifth Circuit, where it attempted to justify paying $7.7 million for services it alleged were undelivered by affiliate Highland Capital Management. This appeal concerns a $2.6 million bill NexPoint received after terminating a contract prematurely with Highland.
The dispute arose from shared services agreements made in 2018 between the two companies for 25 employees and services. After Highland filed for bankruptcy in October 2019, some employees left or were terminated, yet Highland continued billing NexPoint for all 25 employees. NexPoint argues it should not be liable for paying for services it did not receive. However, the case became more complicated when U.S. Circuit Judge Jerry Smith questioned NexPoint’s attorney on why the payments continued despite the knowledge that many employees had already been let go.
Judge Smith expressed disbelief, asking, “Your client knew that many of these employees had been terminated, but you continued to pay for about 35 months?” NexPoint’s attorney, Davor Rukavina, explained that, due to federal law and the bankruptcy freeze, NexPoint could not terminate the agreements without violating legal obligations. He further stated that negotiations with Highland were unfruitful as the company refused to engage in any meaningful discussions.
