While Lehman Brothers Holdings Inc. at its peak was the fourth-largest investment bank in the world, it’s now just a purgatory for a small team that is writing the last chapter in the storied history of the company. But they are not going down/away without a fight. On Wednesday, the remaining Lehman employees filed suit against Credit Suisse in U.S. Bankruptcy Court in New York. The suit alleges that Credit Suisse Group AG (ADR) (NYSE:CS) drastically inflated its losses when Lehman declared bankruptcy on September 15, 2008.
Lehman Brothers is asking to slash a billion dollars
Lehman Brothers is asking that the U.S. government slash roughly a billion dollars from the $1.2 billion in losses that Credit Suisse Group AG (ADR) (NYSE:CS) claims it incurred due to the early termination of thousands of derivatives contracts when Lehman declared bankruptcy.
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Lehman’s lawyers are claiming that Credit Suisse, one of the world’s largest derivative dealers, failed to offset counterbalancing positions and that it was quite selective with its valuation dates and times which is keeping money from other Lehman creditors.
“Credit Suisse did not actually suffer $1.2 billion in losses it now seeks from the Lehman estates,” according to the Lehman suit, filed Wednesday. “Instead, Credit Suisse deliberately constructed bankruptcy claims designed to impose upon Lehman hundreds of millions of dollars in costs and charges that Credit Suisse did not actually incur and which did not reasonably, or in good faith, reflect the actual value of the terminated transactions.”
Credit Suisse yet to respond to Lehman Brothers suit
Credit Suisse Group AG (ADR) (NYSE:CS) has yet to respond to the recent Lehman Brothers suit. Not only is Lehman asking Judge James Peck, the man who resided over Lehman’s Chapter 11 case, to rubbish all but $75 million of the money owed to Credit Suisse; the Lehman estate claims that it is owed $150 million by Credit Suisse for a terminated deal.
Well, at least the lawyers are getting paid.
Credit Suisse Group AG (ADR) (NYSE:CS) joins the ranks of JPMorgan Chase & Co. (NYSE:JPM), and and Citigroup Inc (NYSE:C) whom have also been sued by Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) following its collapse. In each case Lehman has cried “phantom losses” while each of the banks have, not surprisingly, denied any wrongdoing.
When Lehman finally folded in the largest bankruptcy case in U.S. history, the firm was a party to or had guaranteed more than 10,000 derivative contracts representing more than 1.7 million transactions, according to court documents.
The team charged with winding down Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) has so far recovered billions (in cash) for the benefit of creditors, but the fight will continue for years if not a decade.