In a bankruptcy dispute that may be best settled in divorce court, the biggest creditor claim to date in the Lehman Brothers bankruptcy case comes from a corporate cousin of the failed investment bank.
Earlier this month, Lehman Brothers Bank FSB, a Delaware charted savings bank, has filed a $2.19 billion claim against its better-known corporate parent. The claim stems from an obligation Lehman bank alleges the corporate holding company had to assume some of its loans.
In a bankruptcy filing, Lehman bank says it had “the right to sell these loans to the debtor on any sale date that it designates. Lehman bank, on Sept. 14, designated Sept. 15 as the date for selling some of the residential, commercial and student loans on its books. For those not aware, Sept. 15 just happens to be the date that Lehman officially filed for bankruptcy.
Who knows how this dispute will get settled. The claims in the Lehman bankruptcy are quickly adding up. So far, Lehman bank’s claim is the biggest but it may well be surpassed by claims from some of the investment bank’s big derivatives trading partners.
But what may be most fascinating about this dispute is that Lehman’s savings bank, which has been backed by the FDIC since 1958, is still up and running. The bank did not follow the holding company into bankruptcy and the FDIC has not taken it over.
That’s not to say the bank hasn’t felt the pain from Lehman’s collapse. As of Sept. 30, Lehman bank had $7.2 billion in assets and some 1,500 employees. A year earlier, it had $17 billion in assets and more than 4,000 employees. Over that same period, deposits have plunged from $13 billion to about $5.5 billion.
But a visit to Lehman website gives no indication of the distress that has befallen the investment bank. There’s no mention of the bankruptcy filing on the homepage. And dig deeper, and you’ll find that you can still apply for a Lehman credit card.
Hmm, sounds like that could be a collector’s item, or sold on Ebay, some day.