Tags: Lehman | Barclays | Windfall | Sale

Lehman Says Barclays Got $13 Billion Windfall in Sale

Thursday, 18 Mar 2010 02:03 PM

Lehman Brothers Holdings Inc. fired new allegations at Barclays Capital Inc. on Thursday, saying the British investment bank got a $13 billion "windfall" profit from its deal to buy Lehman's U.S. brokerage in September 2008.

In documents filed in U.S. bankruptcy court in Manhattan, Lehman claimed new evidence showed that while Barclays said it had a "day one" accounting gain of $4.2 billion on the Lehman acquisition, in reality it received a $13 billion windfall "immediately upon acquisition."

Lehman filed for bankruptcy on Sept. 15, 2008, the largest U.S. bankruptcy filing in history. Its flagship U.S. brokerage business was sold to Barclays for about $1.85 billion less than a week later in a hurriedly arranged deal.

Lehman said the deal presented to the court was not the one that was actually executed. Lehman employees who had been offered new jobs at Barclays had arranged for Barclays to get a $5 billion discount on Lehman's $70 billion book of securities, Lehman claimed.

"The 'negotiated' sale price for the assets had nothing to do with 'book value' and contained an embedded $5 billion gain for Barclays that was not disclosed," Lehman's attorneys at Jones Day wrote.

Lehman also claimed that Barclays knew its purchase agreement required $2 billion to be spent on bonuses to former Lehman employees, but in reality Barclays has only paid $1.55 billion.

A spokesman for Barclays was not immediately available to comment, but the bank previously said it believes Lehman and its creditors are trying to "re-trade" the deal now that markets have stabilized.

A court hearing on Lehman's dispute with Barclays is set for April 9, according to court documents.

© 2015 Thomson/Reuters. All rights reserved.

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