Lehman Settles With NY Giants In Case ‘Involving’ Baupost

lehman brothers
Image source: Made with Photoshop

Lehman Brothers reached a settlement on Wednesday with the New York Giants, putting to rest a lingering dispute over soured interest-rate swap deals tied to the construction of MetLife Stadium.

The terms of the settlement, announced in a court filing, weren’t disclosed, while representatives of Lehman and the Giants couldn’t be reached for comment.

Lehman sued Giants Stadium

In October 2013, Lehman filed an adversary proceeding complaint against Giants Stadium LLC.

Top value fund managers are ready for the small cap bear market to be done

InvestorsDuring the bull market, small caps haven't been performing well, but some believe that could be about to change. Breach Inlet Founder and Portfolio Manager Chris Colvin and Gradient Investments President Michael Binger both expect small caps to take off. Q1 2020 hedge fund letters, conferences and more However, not everyone is convinced. BTIG strategist Read More

The defunct financial giant sued Giants Stadium claiming it was owed $100 million under an interest rate swap tied to the financing of the New York Giants’ football stadium. Giant Stadium LLC was set up by the team’s owners, the Mara and Tisch families, to fund the construction of MetLife Stadium.

Giant Stadium LLC issued $650 million in bonds to finance the stadium, the bulk of which were underwritten by Lehman. The Giants entered an interest-rate swap agreement with the bank.

In order to beat out competition from Goldman Sachs Group Inc., Lehman offered a lower interest rate to the Giants. However, in September 2008, Lehman Brothers filed a voluntary petition with the U.S. Bankruptcy Court under Chapter 11 of the Bankruptcy Code. This collapse caused the financial giant to default on the deal and apparently created a loss for the Giants.

Lehman’s allegation against Baupost and Giants

After Lehman crashed into bankruptcy in October 2008, Giants Stadium filed proofs of claims against the investment bank in the bankruptcy cases for $301.8 million. Subsequently, the Giants sold the claim to Seth Klarman’s Baupost Group hedge fund, a firm which specializes in value oriented distressed debt investing.

In its lawsuit, Lehman alleged that Baupost and Giants Stadium then “devised a plan to ratchet up the pressure on Lehman to settle at an unreasonable level” by nearly doubling the claim against the financial giant and its derivatives subsidiary to $585 million.

The court document reveals that on January 27, 2015, Giants Stadium and Lehman resolved all matters among them. Accordingly, both the adversary complaint and the counterclaims are dismissed without prejudice.

Following the Giant Stadium and the Lehman Brothers Holdings consenting last Monday to abandon their claims against each other, the long-running fight in Lehman’s Chapter 11 court stands resolved.