• Bank liquidator, Exxon fight over millions in London court
  • Exxon says its own initial default notice letter was invalid

The liquidators of Lehman Brothers Holdings Inc.’s London unit said Exxon Mobil Corp. wrongly valued collateral used in a $250 million short-term lending deal that fell apart when the bank collapsed nearly eight years ago.

The dispute revolves around fast-changing values of assets during the financial crisis brought about by the bank’s collapse, and when Exxon Mobil notified Lehman it was in default. The energy giant argues that it’s owed $8.6 million, and PricewaterhouseCoopers, the bank’s administrators, want $13.9 million from Exxon.

Aftershocks from Lehman Brothers’ collapse are still felt in European courtrooms, where creditors are disputing the value of their deals with the bank. PwC estimates there will be a surplus of as much as 7.8 billion pounds ($10.3 billion) after the creditor claims are resolved.

Exxon is arguing that a letter it sent headed “default notice" on Sept. 15, 2008, wasn’t a valid default notice. The company says the effective notice was sent a day later, which meant the date of the valuation of the assets also set a day later.

PwC says the Sept. 15 letter is valid. The disputed date means Exxon’s collateral in a sale-and-repurchase agreement, where securities are exchanged for short-term cash, was improperly valued, according to the liquidator’s documents from a London trial that started Monday.

ExxonMobil Financial Services “contends, somewhat surprisingly, that the letter which it undoubtedly intended as a default notice was invalid,” Lehman lawyers said in court documents. The firm “always accepted it as valid.”

Lehman lawyers also said Exxon was "nit-picking over the precise content of a default notice years after the event.” Exxon legal documents describe the company as the "blameless victim of [Lehman’s] default," and that it "was faced with conducting a valuation in a febrile atmosphere.”

PwC and Exxon both declined to comment while proceedings are ongoing.

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