Bank of America Corp. (BAC:US) and Barclays Plc (BARC), which have been trying to sell part of a stake in Archstone to Sam Zell’s Equity Residential (EQR:US), denied they engaged in illegal or harmful conduct, as Lehman Brothers Holdings Inc. (LEHMQ:US) alleged.
Bankrupt Lehman, which has agreed to buy half of the banks’ Archstone stake for $1.3 billion, revised a lawsuit last month to stop them from selling their remaining stake for almost $1.5 billion to the Zell company. The banks would be unjustly enriched if Lehman was forced to match Zell’s price, the defunct firm said in the amended complaint filed in Manhattan bankruptcy court.
Lehman has said it wants to take control of Archstone in preparation for a later sale to benefit creditors. The banks have said they owe it to their shareholders to get the best price they can. The Zell company said in February its minimum price would be $1.5 billion if it exercised an option to buy the remaining half of the banks’ stake.
“Bank of America denies that it has engaged in illegal conduct or that any conduct that it is alleged to have engaged in has harmed plaintiffs,” the second-biggest U.S. bank said in its latest filing.
Archstone, which Lehman acquired in a $22 billion leveraged buyout with Tishman Speyer Properties LP, has ownership interests in hundreds of apartment developments from Washington and New York to San Francisco. Lehman and the banks made loans, which they later converted to equity after Archstone faltered in the 2008 credit crisis. Lehman previously owned 47 percent of Archstone.
The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, and the Archstone case is Archstone LB Syndication Partner LLC v. Banc of America Strategic Venture Inc. (In re Lehman Brothers Holdings Inc.), 11-02928, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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