Lehman Feb 5

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Barclays Bank PLC

1. Lehman Defends $83M Swap Suit Against Barclays

   Feb 4, 2016 | Law360

   By Jonathan Randles
   
   
   Lehman Brothers Holdings defended Thursday in New York court an $83 million lawsuit accusing Barclays Bank PLC of working with an investment firm to manipulate an interest swap agreement, saying Barclays seized upon on Lehman’s 2008 bankruptcy to get a sweetheart deal on a replacement swap.

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Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Barclays Bank PLC

1. Lehman Defends $83M Swap Suit Against Barclays

   Feb 4, 2016 | Law360

   By Jonathan Randles

   Lehman Brothers Holdings defended Thursday in New York court an $83 million lawsuit accusing Barclays Bank PLC of working with an investment firm to manipulate an interest swap agreement, saying Barclays seized upon on Lehman’s 2008 bankruptcy to get a sweetheart deal on a replacement swap.
   
   The complaint involves Barclays, which purchased Lehman’s brokerage business following the investment bank’s collapse, and real estate investment company LCOR Alexandria LLC. LBHI claims that LCOR, with Barclays' assistance, made bogus calculations after cancelling the swap deal with subsidiary Lehman Brothers Special Financing Inc.
   
   During a court hearing in Manhattan, LBHI attorney Andrew Rossman of Quinn Emanuel Urquhart & Sullivan LLP said Barclays replaced Lehman’s position on the swap at a deeply discounted price of $15.6 million. Rossman said LCOR needed Barclays in order to pull off the alleged scheme.
   
   “They’ve got to have a party that’s willing to play ball,” Rossman said.
   
   The swap, which the parties entered into in 2001, had a maturity date of Sept. 15, 2032, and an initial notional amount of $60 million, according to the complaint. In September 2008, LBHI filed its Chapter 11 bankruptcy petition, and LBSF followed suit the next month.
   
   LCOR terminated the swap in December 2008, citing LBSF's bankruptcy filing and LBHI's credit downgrading as events of default. LBHI says its subsidiary was "in the money" on the terminated swap and therefore was entitled to an early termination payment.
   
   The day before it sent LBSF notice of the swap termination, LCOR entered into a new swap with Barclays, which paid it $15.6 million up front, according to court documents. Barclays effectively stepped into LBSF's shoes in the terminated swap, agreeing to the same terms that would have applied if the swap hadn't been terminated, the complaint alleges.
   
   LBHI has said in court documents that the Barclays employees that helped execute this agreement had previously worked for Lehman and had been maintaining it for several years. Rossman described Barclays as a “willing participant” in the alleged scheme.
   
   At Thursday’s hearing, Barclays attorney Thomas Moloney of Cleary Gottlieb Steen & Hamilton LLP challenged LBHI’s assertions and said his client was a passive participant in the deal. Moloney described Barclays as an  “innocent bystander” in the lawsuit and suggested that Barclays simply made a prudent business decision.
   
   Barclays, along with other defendants involved in the complaint, has filed a motion to dismiss the lawsuit.
   
   The complaint seeks more than $42 million LBHI says was due upon LCOR terminating the transaction, plus $41 million in contractual interest for a total damages of $83 million as of November 2013...

   For full story: http://www.law360.com/articles/755387/lehman-defends-83m-swap-suit-against-barclays
   

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