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It did not take Sallie Mae (SLM) long to sue the private equity firms that planned to buy it, and the banks that were to fund the deal. The lead investor was JC Flowers and the major banks were JP Morgan (JPM) and Bank of America (BAC). When it appeared to the buyers that SLM’s financial returns might not be as robust as forecast and the federal government cut funding for student loans, the private equity interests hit the doors.

Sallie Mae contends that its business is fine, and that there is no reason for Flowers and its friends to ask for a price reduction on the $25 billion deal  The head of SLM was quoted by The Wall Street Journal as saying "Sallie Mae has honored its obligations under the merger agreement. We ask only that the buyer group do the same." Well said.

SLM want the break-up fee of $900 million if Flowers plans to back out.

The whole thing could be settled soon, or both sides could harden their positions and head to court. If they do, it may put pressure on the boards of other public companies where private equity interests have walked away from buy-out deals. The list of potential lawsuits could begin with Acxiom (ACXM), where private-equity firms Silver Lake Partners and ValueAct Capital Partners walked away, and widen to encompass other broken deals.

An irony, perhaps, that lawsuits could do more to slow private equity than the credit markets. But, at public companies, boards may feel a deal is a deal. They don’t want their shareholders to sue them. That would be two suits too many.

Douglas A. McIntyre