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Lehman 3/30
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2nd Circ. Says FirstBank Can't Claim $62M Lehman Collateral
Mar 29, 2016 | Law360
By Jody Godoy
The Second Circuit ruled on Tuesday thatFirstBank Puerto Rico can't take back $62 million tied to a swaps deal with Lehman Brothersthat was then sold on to Barclays Capital Inc., and said the bank owes Barclays fees. -
Lehmans UK to payout £100m after market rally
Mar 29, 2016 | Financial Times Adviser
By Katherine Denham
Failed investment bank Lehman Brothers UK has been ordered by the High Court to make loan repayments to its parent company, after finding it had no further liabilities to pay off.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
FirstBank Puerto Rico
Lehman Brothers UK
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2nd Circ. Says FirstBank Can't Claim $62M Lehman Collateral
Mar 29, 2016 | Law360
By Jody Godoy
The Second Circuit ruled on Tuesday thatFirstBank Puerto Rico can't take back $62 million tied to a swaps deal with Lehman Brothersthat was then sold on to Barclays Capital Inc., and said the bank owes Barclays fees.
In a summary order, the three-judge panel affirmed U.S. District Judge Naomi Reice Buchwald's 2014 ruling agreeing with a bankruptcy judge that when Barclays bought Lehman's assets — including the securities in question — for $45 billion in 2008, it did so free and clear of claims like FirstBank's.
The panel also upheld sanctions against FirstBank for charging ahead with its suit in the district court in spite of a litigation ban attached to the bankruptcy court-approved sale.
“The appropriate venue to litigate whether such securities were transferred as part of the sale was bankruptcy court, not a district court proceeding,” the panel said.
FirstBank gave the securities to a Lehman entity called Lehman Brothers Special Financing, or LBSF, as collateral in the swaps transaction. LBSF then sold the securities to Lehman Brothers Inc., or LBI, the company’s brokerage business. According to court filings, LBI used the securities to fund its business in the months before the investment banking giant went bankrupt in September 2008, then sold them to Barclays.
In its suit, FirstBank has argued that the securities were improperly included in the Barclays sale order and then confirmed in a clarification letter that was never presented to or approved by the bankruptcy court.
At oral arguments in the appeal held in mid-March, attorneys for Barclays argued that FirstBank had explicitly given LBSF the right to sell the securities “free from any claim” by FirstBank, meaning that FirstBank had no interest in the securities when they were ultimately transferred to Barclays....For full story: http://www.law360.com/articles/777378/2nd-circ-says-firstbank-can-t-claim-62m-lehman-collateral
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Lehmans UK to payout £100m after market rally
Mar 29, 2016 | Financial Times Adviser
By Katherine Denham
Failed investment bank Lehman Brothers UK has been ordered by the High Court to make loan repayments to its parent company, after finding it had no further liabilities to pay off.
Lehmans UK was declared insolvent on 29 September 2008 after suffering huge losses due to its exposure to the US sub-prime mortgage market, in a major turning point of the financial crisis that began in the banking sector and plunged global economies into recession.
However, markets turned shortly thereafter, which increased the value of its assets and decreased the value of its liabilities, meaning that it has subsequently been able to pay all its debts, plus interest.
As a consequence, administrators had to work out what to do with the surplus cash, but needed the court’s approval to decide.
Investor victims of the Lehmans collapse formed an action group and protested in 2009 to demand recompense after the failure of its structured products.
Last year, a campaigner who was still seeking compensation on investments underwritten by the failed investment bank called for greater checks and balances to decisions made by the Financial Services Compensation Scheme.
Lehman UK’s parent company Lehman Brothers Luxembourg Investments - which is ultimately owned by the Lehman Brothers Group - wanted the part repayments of £100m to be free to use for its business.
In a hearing which took place earlier this year, the firm asked the court to decide whether repayments should be held in a trust for its subsidiary Lehman Brothers UK in case any new creditors came forward, or whether they are available to distribute.
The payments are subordinated loans - ranked below other debts or securities if the company goes bust - made to the UK company under three agreements between June 2004 and July 2005.
Lehman UK’s main purpose was to manage the flow of investment funds between Lehman Group’s subsidiaries.
When Lehman UK entered insolvency proceedings, administrator Gillian Bruce said the company’s estate was far greater than the amounts initially estimated.
Payments were made to creditors, but not all of them emerged, despite a website being set up to give the various Lehman entities information about the Lehman estates....
For full story: http://www.ftadviser.com/2016/03/29/ifa-industry/companies-and-people/lehmans-uk-to-payout-m-after-market-rally-0vyFhukYDxyx765xJcN4FO/article.html
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
FirstBank Puerto Rico
Lehman Brothers UK
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