Lehman attorney says Barclays positions on $8.2 billion claim unclear

By Alice Popovici

New York, Oct. 15 - Lehman Brothers Holdings, Inc. attorneys said it is unclear what issues Barclays Capital, Inc. wants to present to the U.S. Bankruptcy Court for the Southern District of New York during the evidentiary hearing it requested Thursday in regard to Lehman's claim that Barclays received $8.2 billion more than it should have in the Sept. 20, 2008 asset sale.

Lehman said court-approved discovery has uncovered the fact that material components of the sale transaction were not revealed to the court at the sale hearing and that the final transaction differed from the one described to the court.

"We are not ruling out the possibility that you will find that an evidentiary hearing is necessary," Lehman attorney Robert Gaffey, with law firm Jones Day, told the court.

But he added that he doesn't know "what facts are under dispute."

Judge James Peck agreed to allow Barclays five days for evidentiary hearings, in the event that he has not reached a decision after the parties present their oral arguments.

"We believe they [Lehman] have grossly distorted the facts of what happened" during one of the worst weeks in history for the financial industry, said Barclays attorney Hamish Hume, a partner with law firm Boies, Schiller & Flexner LLP.

Hume said Lehman "played fast and loose" with numbers, and he asked the court to not grant the relief it has requested before hearing more detail about the history of the transaction.

As previously reported, Lehman claimed that Barclays received at least $5 billion of excess collateral under a repurchase agreement, $2.7 billion in so-called additional value added to the deal at Barclays' demand while the sale hearing was in progress and $2.3 billion in OCC margin deposits added after the sale hearing, less the $1.738 billion of liabilities Barclays actually assumed.

The company said the amount could be larger than $8.2 billion.

No hearing has yet been scheduled.

New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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