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Accredited Home Lenders Holding Co. is an interesting position. The company came to terms to be sold to Lone Star Fund V LP. Then the market when south and Lone Star has lost interest in buying the mortgage company. So now Accredited is telling Lone Star, buy us or we will sue.

The reality is that Accredited is going to go under if the deal does not happen, so they are in a Catch 22. Rarely have the courts enforced a sales contract that has not been completed. There may be some financial penalties the lawyers could get, but that will be decided long after Accredited has disappeared.

For the folks at Accredited, this is a tough time. They had a sales agreement before the market completely dropped out, but now it will be essentially unenforceable and most likely the company will fade away.

Last month Lone Star extended its tender offer until Tuesday to buy the Calabasas, Calif.-based mortgage lender for $15.10 per share, or $400 million. Lone Star said July 30 that Accredited Home Lenders (nasdaq: LEND - news - people )’ shareholders had tendered just 8.2 million shares, or less than a third of the company’s outstanding stock.
Accredited said if more than 50 percent of its outstanding shares are tendered by the Tuesday deadline it believes all conditions will have been met to close the offer.
In its SEC filing, Lone Star stated it did not expect to accept Accredited Home shares tendered as of midnight, Aug. 14. via  Forbes.com

Update: Lone Star Press Release on Accredited Lawsuit.

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