Bloomberg News

Barclays Seeks to Delay $2 Billion Lehman Brokerage Payment

July 13, 2011

(Updates with brokerage payment in second paragraph.)

July 13 (Bloomberg) -- Barclays Plc, ordered to return $2 billion in margin assets to bankrupt Lehman Brothers Holdings Inc.’s brokerage, asked a judge to allow it to appeal the judgment without making any payments in the meantime.

The trustee liquidating the remnants of the brokerage, James Giddens, would hold off paying London-based Barclays the $1 billion he owes the U.K. bank, according to a court filing yesterday made jointly by Barclays and the brokerage.

U.S. Bankruptcy Judge James Peck in New York ruled last month that Barclays must give back the margin assets it claimed it was using to back trading positions taken on when it bought Lehman’s North American businesses in the 2008 credit crisis. He set interest at 5 percent of the assets from September 2008 until he signs his final order on the case, which he hasn’t done.

The dispute, arising from Barclays’s September 2008 purchase of bankrupt Lehman’s businesses and subsequent profit on them, led to a bankruptcy court trial in 2010 with more than 30 days of testimony. The trial pitted the third-biggest U.K. bank against two defunct parts of what was once the fourth- largest U.S. investment bank.

The Lehman parent lost a bid to recoup an alleged $11 billion “windfall profit” made by Barclays, and the brokerage had its demands cut from $7 billion.

Instead of having Barclays post a bond while it appeals, Giddens agreed to let it to put collateral in a bank account “from time to time.” A $1 billion bond from a “reputable” bonding agency, presuming one could be obtained, might cost $10 million, Barclays said in the filing.

The case is SIPC v. Lehman Brothers Inc., 08-ap-1420, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: Andrew Dunn, Stephen Farr

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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