JPMorgan to pay $1.42 billion cash to settle most Lehman claims
By Jonathan Stempel
NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N: Quote) will pay $1.42 billion in cash to resolve most of a lawsuit accusing it of draining Lehman Brothers Holdings Inc of critical liquidity in the final days before that investment bank's September 2008 collapse.
The settlement was made public on Monday, and requires approval by U.S. Bankruptcy Judge Shelley Chapman in Manhattan.
It resolves the bulk of an $8.6 billion lawsuit accusing JPMorgan of exploiting its leverage as Lehman's main "clearing" bank to siphon billions of dollars of collateral just before Lehman went bankrupt on Sept. 15, 2008, triggering a global financial crisis.
Lehman's creditors charged that JPMorgan did not need the collateral and extracted a windfall at their expense.
Monday's settlement also resolves Lehman's challenges to JPMorgan's decision to close out thousands of derivatives trades following the bankruptcy, court papers showed.
The accord would permit a further $1.496 billion to be distributed to the creditors, including a separate $76 million deposit, court papers showed.
More than $105 billion has already been paid to Lehman's unsecured creditors, Lehman has said.
"While the Settlement Agreement is not a global resolution of all issues between the parties, it ends a significant portion of their disagreements," lawyers for Lehman and its creditors said in court papers. "The compromises set forth in the Settlement Agreement are a fair and equitable resolution." Continued...