Barclays to oppose Lehman argument tied to bonus payment obligations

By Caroline Salls

Pittsburgh, June 7 - Lehman Brothers Holdings Inc. asset purchaser Barclays Capital Inc. plans to ask the U.S. Bankruptcy Court for the Southern District of New York to dismiss one of the counts in a Lehman complaint related to the buyer's obligations under the September 2008 asset purchase agreement, according to a letter to the court filed June 7.

According to the letter, Lehman filed a motion on May 18 seeking a summary judgment on a portion of count II of its complaint against Barclays, which alleges the buyer failed to fulfill its obligations under the purchase agreement.

Specifically, Jonathan D. Schiller of Boies, Schiller & Flexner LLP said in the letter that the asset purchase agreement does not obligate Barclays to pay $2 billion in bonuses.

In addition, Schiller said Barclays will argue that the $2 billion listed on a financial schedule was an estimate for compensation obligations to be assumed by the buyer, which included both bonus and severance payments.

Schiller also said Barclays paid roughly $2 billion in bonus, severance and related tax payments that it assumed under the purchase agreement.

"In any event, [Lehman] certainly has suffered no damage as a result of the amount of bonuses Barclays paid under the APA," Schiller said in the letter.

Barclays plans to file its motion to dismiss the count on June 17.

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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