Lehman Brothers Holdings Inc. Tries to Avoid Paying Foreign Guarantee Claims

Lehman Brothers Holdings, Inc. (LBHI) asked a New York bankruptcy court to shield the defunct investment banking firm from potentially having to pay billions of dollars to investors located around the world that hold guarantee claims by arguing the investors will be fully compensated in legal proceedings taking place in the United Kingdom.

The largest remaining pool of unresolved claims are those related to it guaranteeing certain obligations of its foreign subsidiary, Lehman Brothers International Europe (LBIE). In it motion to the court, Lehman argues it shouldn’t have to face any related monetary exposure because LBIE will eventually pay all those investors holding the guarantee in full plus interest. 

Lehman’s motion asks the  U.S. Bankruptcy Judge to value the outstanding LBIE  against LBHI at $0, thereby shielding the domestic entity from paying off the European claims. LBHI argues that if it were required to pay any amount on these claims, LBIE creditors “would receive more than a single satisfaction of their claims,” which is unlawful.

If the bankruptcy court grants LBHI’s request, it would allow the estate to free up $4.3 billion it has been holding in reserve and speed up the resolution of the bankruptcy proceeding because those 1,100 some claims are spread around 46 different countries.

The experienced securities fraud attorneys at Colling Gilbert Wright have litigated and resolved dozens of Lehman Brother’s related investor claims. If you lost money in a Lehman Brother investment, contact our office for a free case evaluation.