Lawyers for Lehman Brothers asked a bankruptcy judge for permission to investigate Barclays PLC, the British bank that bought Lehman’s broker-dealer business amid the early chaos of its bankruptcy.
Lehman Brothers Holdings Inc. argued in court papers filed Monday that Barclays paid less than its “full obligation,” potentially shorting Lehman as much as billions of dollars. It asked for the right to investigate Barclays Capital Inc. to determine if it has a valid claim.
A Barclays spokesman said the bank had no comment.
The sale of Lehman’s core assets was approved by the court in September, less than a week after Lehman rushed into court protection in the biggest bankruptcy in U.S. history.
Lehman argued then that the Barclays deal was the only viable offer and that the sale needed to be consummated quickly since the value of the broker-dealer was dropping by millions of dollars a day.
Barclays paid $250 million in cash for the deal ? which included Lehman’s Midtown Manhattan headquarters ? and was then obligated to pay certain employee costs and other liabilities. Since then, Lehman lawyers argued, it has become aware of “apparent material discrepancies relating to the liabilities Barclays was to assume and the benefits LBHI was to receive.”
Specifically, Lehman said the discrepancies relate to employee bonuses, certain contract cure amounts and certain asset transfers related to repurchase transactions. Debtors pay cure amounts when they abandon contracts.
After also negotiating the sale of Lehman’s businesses in Asia, Europe and the Middle East, lawyers are winding down the remainder of Lehman’s assets.
U.S. Bankruptcy Judge James Peck is expected to consider the request to investigate Barclays on June 3.
Lawyers for Lehman Brothers asked a bankruptcy judge for permission to investigate Barclays PLC, the British bank that bought Lehman’s broker-dealer business
Copyright 2009 The Associated Press.