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Lehman to receive $797.5 million to settle last of JPMorgan disputes
By Caroline Salls
Pittsburgh, Feb. 1 – Lehman Brothers Holdings, Inc. and its official committee of unsecured creditors reached a $797.5 million settlement with JPMorgan Chase Bank, NA, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.
“The settlement finally resolves the last of LBHI’s disputes with JPMorgan, its largest secured creditor, and enables creditor distributions of nearly $800 million,” the motion said.
Under the settlement, JPMorgan will make a $797.5 million cash payment to Lehman.
In exchange, Lehman will withdraw its objection to JPMorgan’s claims related to triparty repo-related losses (Tassimo claims), as well as claims related to the disposition of collateral held under some Lehman Brothers Inc. securities lending transactions and other miscellaneous claims.
Through the Tassimo claims objection, Lehman and the committee refuted the sufficiency of the credit provided to Lehman Brothers in connection with its disposition of securities collateral.
In addition to alleging that JPMorgan disposed of Lehman Brothers collateral “in a commercially unreasonable manner,” Lehman said the objections contended that JPMorgan improperly included in its claim about $280 million of post-bankruptcy interest and that it failed to net against the deficiency claim value received in a settlement from Barclays, resulting in an improper double recovery.
A hearing on approval of the settlement is scheduled for Feb. 16.
New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.
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