NexPoint Advisors LP faced sharp questioning Wednesday in its Fifth Circuit appeal over a $2.6 million judgment tied to prematurely ending a service agreement with its bankrupt affiliate Highland Capital Management. The alternative investment firm is seeking to recoup $7.7 million it claims it paid for undelivered services but faced scrutiny for continuing payments despite knowing that staff reductions had occurred.
Payments Amid Termination Questions
The legal wrangling stems from agreements between NexPoint and Highland in 2018 for 25 shared employees and various services. NexPoint’s attorney, Davor Rukavina of Munsch Hardt Kopf & Harr PC, argued that his client had no practical choice but to continue payments after Highland filed for bankruptcy in 2019, freezing debtors’ rights.
“There was a period … during which my clients knew they were paying for employees who were not there,” Rukavina told U.S. Circuit Judge Jerry Smith. NexPoint, he said, had tried unsuccessfully to negotiate with Highland, which rebuffed their efforts.
