Lehman Sues Bank of America For $150 Million on Collateralized Debt Deal

Lehman Brothers Holdings Inc. sued Bank of America Corp., claiming $150 million on a collateralized debt obligation.

Lehman is seeking to prevent Bank of America from using “unenforceable” clauses of the deal to “improperly” change Lehman’s right to priority payment on the CDO, according to a complaint filed yesterday in U.S. Bankruptcy Court in New York.

Seeking money to pay creditors, the bankrupt investment bank has been using lawsuits and requesting court rulings to preserve disputed payment rights on derivatives transactions. The disputes hinge on conflicts between bankruptcy law and the rules governing swap agreements.

Lehman earlier successfully sued BofA over a lending issue, demanding the return of $500 million of deposits.

Shirley Norton, a spokeswoman for Charlotte, North Carolina-based BofA, didn’t immediately reply to an e-mail seeking comment on the new lawsuit.

The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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