Lehman debtor files suit, claims creditors are withholding $99 million

By Caroline Salls

Pittsburgh, Jan. 15 - Lehman Brothers Holdings, Inc. debtor Lehman Brothers Special Financing, Inc. filed a lawsuit against creditors Millennium USA, LP and Millennium Management, LLC in connection with Millennium's alleged refusal to pay $99 million in funds owed to Lehman Brothers Special Financing, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Lehman said Millennium is withholding the $99 million admittedly owed to the debtor for the redemption of its capital account representing Lehman Brothers Special Financing's partnership interest in Millennium USA.

According to the complaint, Millennium is also knowingly disregarding its legal and fiduciary duties under Delaware law and an agreement with the Lehman debtor "in order to gain leverage and personal reward at the expense of LBSF, its estate, and LBSF's other creditors."

As justification, the Lehman debtor said the Millennium entities "assert patently unlawful and non-mutual setoff rights."

However, the Lehman debtor said the setoffs are in express violation of the Bankruptcy Code "because the obligations defendants seek to set off are clearly non-mutual."

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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