Lehman Brothers deal slashes Swiss unit's claims by billions
By Tom Hals
(Reuters) - Lehman Brothers Holding Inc has slashed billions of dollars of claims made by a former Swiss derivatives unit as details of the agreement were presented in a court filing.
Lehman Brothers emerged from bankruptcy a year ago but it is still working to resolve several outstanding legal battles. The agreement with Switzerland-based Lehman Brothers Finance AG, or LBF, was the last major dispute to be settled, according to Daniel Ehrmann, Lehman Brother Holding's international chief.
"This settlement avoids years of potentially costly litigation and allows LBF to significantly accelerate its distributions to creditors while providing LBHI with a significant recovery," said Ehrmann in a statement.
The agreement was announced last week, but details were not disclosed until a Tuesday filing with the U.S. Bankruptcy Court in Manhattan.
LBF agreed to cuts its claim against Lehman Brothers Holding to $942 million from $15.4 billion, according to court papers. LBF also assigned to Lehman Brothers Holding billions of dollars of claims that LBF asserted against certain Lehman affiliates.
In return, Lehman Brothers Holding cut its claim against the Swiss business to $8.75 billion from an original claim of $14.2 billion. The holding company also agreed to partially subordinate its claim against LBF to the claims of LBF's third-party and affiliate creditors.
The U.S. Bankruptcy Court in Manhattan must approved the deal. A hearing has been requested for April 24.
Once Wall Street's fourth-largest investment bank, Lehman filed for bankruptcy protection on September 15, 2008, in what was a major trigger for that year's global financial crisis. Continued...