NEW YORK, Nov 30 (Reuters) - A unit of Lehman Brothers Holdings Inc, which filed the largest U.S. bankruptcy, has sued Bank of America Corp and a Barclays Plc affiliate to stop the liquidation of $150 million of collateral that Lehman says belongs to creditors.
Lehman Brothers Special Financing Inc said in the lawsuit it is a party to swap agreements related to a collateralized debt obligation for which Bank of America serves as trustee and Long Island International Ltd, the Barclays affiliate, is a 'controlling' investor.
Lehman said it has a 'priority payment right' to collateral tied to the CDO, Ceago ABS CDO 2007-1, but that Bank of America's actions allow Long Island to direct that the swap agreements be terminated and the collateral liquidated.
This, Lehman said, would violate U.S. bankruptcy law, and 'cost the bankruptcy estate and its creditors approximately $150 million,' according to the complaint filed in the U.S. bankruptcy court in Manhattan on Monday night.
A spokesman for Charlotte, North Carolina-based Bank of America did not immediately respond to a request for comment.
Barclays spokesman Michael O'Looney declined immediate comment, saying the bank had yet to review the complaint.
Once the fourth-largest U.S. investment bank, Lehman filed for Chapter 11 protection on Sept. 15, 2008. It is trying to repay creditors still owed hundreds of billions of dollars.
Lehman is separately suing Barclays over an alleged $11 billion 'windfall' it said the British bank got when it acquired a U.S. brokerage unit just after the bankruptcy.
On Nov. 16, U.S. Bankruptcy Judge James Peck ordered Bank of America to return $500 million of deposits it seized from Lehman shortly after the bankruptcy filing. Peck also oversees Lehman litigation related to the bankruptcy case.
The case is Lehman Brothers Special Financing Inc v. Bank of America NA et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04331. The main bankruptcy case is In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.
(Reporting by Jonathan Stempel; Additional reporting by Kirstin Ridley in London; Editing by Lisa Von Ahn, Dave Zimmerman) Keywords: LEHMAN/BANKOFAMERICA LAWSUIT (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Lehman Brothers Special Financing Inc said in the lawsuit it is a party to swap agreements related to a collateralized debt obligation for which Bank of America serves as trustee and Long Island International Ltd, the Barclays affiliate, is a 'controlling' investor.
Lehman said it has a 'priority payment right' to collateral tied to the CDO, Ceago ABS CDO 2007-1, but that Bank of America's actions allow Long Island to direct that the swap agreements be terminated and the collateral liquidated.
This, Lehman said, would violate U.S. bankruptcy law, and 'cost the bankruptcy estate and its creditors approximately $150 million,' according to the complaint filed in the U.S. bankruptcy court in Manhattan on Monday night.
A spokesman for Charlotte, North Carolina-based Bank of America did not immediately respond to a request for comment.
Barclays spokesman Michael O'Looney declined immediate comment, saying the bank had yet to review the complaint.
Once the fourth-largest U.S. investment bank, Lehman filed for Chapter 11 protection on Sept. 15, 2008. It is trying to repay creditors still owed hundreds of billions of dollars.
Lehman is separately suing Barclays over an alleged $11 billion 'windfall' it said the British bank got when it acquired a U.S. brokerage unit just after the bankruptcy.
On Nov. 16, U.S. Bankruptcy Judge James Peck ordered Bank of America to return $500 million of deposits it seized from Lehman shortly after the bankruptcy filing. Peck also oversees Lehman litigation related to the bankruptcy case.
The case is Lehman Brothers Special Financing Inc v. Bank of America NA et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04331. The main bankruptcy case is In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.
(Reporting by Jonathan Stempel; Additional reporting by Kirstin Ridley in London; Editing by Lisa Von Ahn, Dave Zimmerman) Keywords: LEHMAN/BANKOFAMERICA LAWSUIT (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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