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Lehman Sues BofA Over $150 Million Collateralized Debt

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Nov. 30 (Bloomberg) -- 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.

Bank of America, sued in its role as trustee, had no comment, said spokesman William Halldin.

Lehman earlier successfully sued Charlotte, North Carolina-based Bank of America over a lending issue, demanding the return of $500 million of deposits.

The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The adversary case is In re Lehman Brothers Holdings Inc., 10-04331, 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.