Lehman says Barclays took at least $8.2 billion more than allowed from 2008 asset sale

By Caroline Salls

Pittsburgh, Sept. 15 - Lehman Brothers Holdings, Inc. has requested court approval to modify its Sept. 20, 2008 asset sale order after it found that Barclays Capital Inc. received $8.2 billion more than it should have under the sale, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The filing 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.

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.

"Information conveyed to the court suggested that Barclays was effectively paying fair value for the assets it was acquiring," Lehman said in Tuesday's motion.

"The fact is that the deal was actually structured to give Barclays an immediate and enormous windfall profit.

"Certain Lehman executives agreed to give Barclays an undisclosed $5 billion discount off the book value of securities transferred to Barclays, and later agreed to give billions more in so-called additional value that Barclays demanded, but the court never approved."

As a result, Lehman said it is now necessary for the court to order Barclays to return the value it took in excess of what it was entitled to under the sale order.

Lehman said Barclays' immediate windfall was also never disclosed to its board of directors.

A hearing is scheduled for Oct. 15.

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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