Lehman and BarCap fight over $8.2bn

City A.M. Reporter
TRUSTEES overseeing the liquidation of Lehman Brothers have accused Barclays Capital of taking $8.2bn (&pound;5bn) more than it should have when it bought the failed bank&rsquo;s brokerage business a year ago.<br /><br />In court papers filed in a US bankruptcy court yesterday, Lehman Brothers Holdings claimed &ldquo;critical changes&rdquo; were made to the sale in between the time the sale order was signed and the deal was closed, resulting in Barclays gaining control of assets that Lehman contends were not supposed to be part of the sale.<br /><br />Lehman filed for bankruptcy on 15 September, in the largest US bankruptcy in history. Its flagship US brokerage business was sold to Barclays less than a week later in a hurriedly-assembled deal led by BarCap boss BobDiamond.<br /><br />&ldquo;Certain Lehman executives agreed to give Barclays an undisclosed $5bn discount off the book value of securities transferred to Barclays, and later agreed to give billions more in so-called &lsquo;additional value&rsquo; that Barclays demanded, but the court never approved,&rdquo; Lehman trustees said in the court filing.<br /><br />The charges come after Lehman received approval in June to probe whether Barclays got &ldquo;too good a deal&rdquo; when it bought Lehman&rsquo;s brokerage business, as the UK bank was able to quickly book a $4.2bn gain on its $1.75bn purchase. Barclays said at the time that it did not expect the probe to result in any additional claims.<br /><br />Lehman is asking the court to amend the deal and a hearing is scheduled for 15 October.<br /><br />&ldquo;This is an opportunistic claim,&rdquo; Barclays said in a statement. &ldquo;Now that the economy has begun to stabilise, the Lehman Estate is trying to re-trade the deal on the basis of a meritless argument.&rdquo;<br /><br />Lehman Brothers Holdings, which works to return investors&rsquo; money, said in a statement that &ldquo;billions of dollars in additional assets&rdquo; that Barclays claims it owns are &ldquo;customer property&rdquo; and were not authorised by the sale.<br /><br />&ldquo;The transfer of these assets to Barclays would create an unfair windfall for Barclays at the expense of public customers,&rdquo; trustees for Lehman Brothers said.