CIBC to pay $149.5 million to Lehman estate, ending dispute

Mon Dec 31, 2012 9:29am EST
 
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* Settlement ends litigation over disputed CDO

* Payment equals $110.3 million after taxes

* Lehman repaying creditors $65 bln after exiting bankruptcy

Dec 31 (Reuters) - Canadian Imperial Bank of Commerce said it would pay $149.5 million to the estate of Lehman Brothers Holdings Inc to resolve litigation over a collateralized debt obligation tied to the bankruptcy of the former Wall Street bank.

In a statement on Monday, Canada's fifth-largest bank said the million payment was equal to $110.3 million after taxes.

CIBC said it had previously recognized a gain of $841 million following Lehman's Sept. 15, 2008, bankruptcy, when it had reduced to zero its financial commitment related to a note issued by the CDO.

On Sept. 14, 2010, Lehman had sued CIBC and dozens of other defendants to recover more than $3 billion that it said it had been deprived of as a result of the Chapter 11 filing.

Lehman contended it had contracts that gave it senior payment priority on various derivatives and collateralized debt obligations, but that the bankruptcy caused this to be improperly replaced with junior payment priority.

It sought to hold CIBC responsible for a large portion of the more than $1.3 billion due under an agreement requiring it to cover payment shortfalls tied to a CDO transaction.   Continued...