LEHMAN Brothers Holdings, whose North American business was taken over by Barclays in 2008, asked a US judge yesterday to force the British bank to return $500m (£312.9m) it says was meant to go to employees.
In the latest round of a long legal dispute, Lehman told a hearing in US Bankruptcy Court in Manhattan that Barclays was required to pay $2bn in bonuses to employees it inherited when it acquired its US investment bank and brokerage operations, but paid only $1.5bn.
Lehman claims that the remainder should go back to its estate for the benefit of creditors.
A Barclays attorney rejected that argument, saying the $2bn figure was an estimate of what it would need to spend to keep its employees and it never agreed to a hard number.
“It was a question of exposure,” Barclays attorney Hamish Hume said at the hearing.
Hume said the estimate also included potential severance and tax considerations and that Barclays has paid nearly the full $2bn when those costs are included.
Lehman, however, said the $2bn figure included only bonus payments.
US.Bankruptcy Judge James Peck did not make a ruling, but he seemed skeptical of Lehman's argument.
“If it turned out that all of the bonus obligations could be valued at $1.5bn instead of $2bn, and as a result no employee was out of pocket and Lehman didn’t have any claims against it, I don’t see how Lehman is damaged,” Peck said.
The legal battle stems from the purchase by Barclays of Lehman’s North American broker-dealer in the days following the investment bank’s September 2008 bankruptcy filing - by far the largest in US history
Lehman lost a bid to recover what it said was an $11bn windfall that went to London-based Barclays.
City A.M. Reporter