MUFG Union Bank branch. Photo: WIKI/CC

A bank that worked with Epiq Systems to promote services to Chapter 7 bankruptcy trustees has sued the legal vendor, claiming the company violated a contract by selling its bankruptcy software unit to a competitor that pushed trustees to switch banks.

In its lawsuit Friday, MUFG Union Bank said more than $150 million of bankruptcy trustee assets have left its vaults since Epiq sold its Chapter 7 software unit to Axos Bank last year. That transaction violated the joint services agreement Epiq signed with the bank, MUFG Union Bank argued. The bank has also named Axos as a defendant, claiming it is liable for interfering with the contract. It argues Axos' client-poaching efforts are speeding up.

“Over the past week (if not longer), Axos Bank has been contacting Union Bank's chapter 7 trustee clients and notifying them that they have 30 days to move their deposits from Union Bank to Axos Bank,” the complaint said. “Axos Bank has been misinforming these customers that Union Bank's relationship manager is going to retire and that the customers will therefore not receive the same support from Union Bank they have previously received.”

The suit, filed in Manhattan Supreme Court, seeks $100 million in damages. In a presentation to investors about its 2018 deal to buy Epiq's Chapter 7 software unit, Axos Bank's parent company said it anticipated making $10 million in fee income in the first year alone, although it's not clear whether that figure represents fees that would have otherwise flowed to MUFG Union Bank.

David Keyko, an attorney for MUFG Union Bank and a partner at Pillsbury Winthrop Shaw Pittman, declined to comment. Representatives for Epiq and Axos didn't respond to comment requests.