Oct. 24 (Bloomberg) -- Lehman Brothers Holdings Inc. sued a company created by the New York Giants football team over claims it’s owed $100 million for early termination of interest-rate swap transactions when Lehman filed for bankruptcy.
Lehman, in a complaint filed yesterday in U.S. Bankruptcy Court in Manhattan, said Giants Stadium LLC undertook a “contorted plan” to avoid its obligation to pay tens of millions of dollars when it terminated the swaps in 2008.
The swaps were part of the financing for the New Meadowlands Stadium in East Rutherford, New Jersey, Lehman said.
Giants Stadium, an entity created by the owners of the National Football League team for their portion of the project, sought the swaps to hedge against interest rate risk from auction-rate securities used to finance the stadium, Lehman said. Lehman was the broker-dealer for those securities, according to Lehman.
In the period leading up to Lehman’s Chapter 11 filing in September 2008, the auction-rate market collapsed and Lehman bought the bonds for its own account rather than auction them periodically, according to the filing. Under the applicable interest rate calculation, the swaps were about $60 million in Lehman’s favor at the time Giants Stadium terminated them, Lehman said.
Pat Hanlon, a Giants spokesman, declined to comment on the lawsuit.
The Giants have filed claims in bankruptcy court against Lehman over the terminated swaps for as much as $585 million each, according to the complaint.
The case is Lehman Brothers Holdings Inc. v. Giants Stadium LLC, 13-01554, U.S. Bankruptcy Court, Southern District of New York (Manhattan.)
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