The group that offered to buy out educational lender Sallie Mae for $25 billion is now seeking court approval to back out and avoid paying a $900 million break-up fee. The investor group, including Bank of America and JPMorgan Chase, is arguing that recent legislation will reduce the student loan corporation's profits, which investors see as "material adverse circumstances" and grounds to get out of the deal without penalty.
Sallie Mae is insisting that if investors want out, they have to pay the fee. "This is now a fight over $900 million. Let's not pretend there's still a deal on the table," said a source. Delaware courts, where the dispute will be resolved, have traditionally held companies to agreements to pay termination fees.