Lehman loses law suit in US against Barclays
The Lehman Brothers lose a law suit against Barclays. Lehman considering to appeal the ruling.
The estate of Lehman Brothers lost a law suit on Wednesday against Barclays over the sale of its investment banking and brokerage businesses to Barclays. The sale was made in September 2008 in the same week that Lehman filed for Chapter 11 bankruptcy. The company received $1.85 billion and was claiming in its law suit that the figure should have been higher. Attempting to raise funds to repay some of its $360 billion debt to creditors, Lehman has also sued J. P. Morgan, Bank of America, and Canadian Imperial Bank of Commerce over similar complaints.
Lehman’s case was that Barclays had misled the original sales hearing, but the Federal Bankruptcy Judge in New York, who oversaw the suit, rejects that claim. Judge James Peck wrote, “the court was not deceived in a manner that should now be permitted to upset the integrity of the sale order.”
The Judge also took into account the urgency of the situation and the perceived gravity of systemic risks at that time, adding, “the sale process may have been imperfect, but it was still adequate under the exceptional circumstances of Lehman Week.”
Barclays responded that it had done the best it could given the unusual lack of time for due diligence on both sides. The Judge agreed that “the court still would have entered the very same sale order because there was no better alternative and, perhaps most importantly, because the sale to Barclays was the means both to avoid a potentially disastrous piecemeal liquidation and to save thousands of jobs in the troubled financial services industry.”
Lehman is currently considering whether to appeal the ruling, and a spokesman refused to comment further.