Barclays Defeats Lehman $500 Million Lawsuit Over Unpaid Employee Bonuses
Lehman said Barclays was required to pay $2 billion in employee bonuses as part of the acquisition and paid only $1.5 billion. U.S. Bankruptcy Judge James Peck in Manhattan ruled against Lehman in a decision filed today, calling Lehman’s claims “baseless.”
“In common vernacular, this is a ‘no harm, no foul’ situation in which Lehman has not been hurt regardless of the amounts paid by Barclays to transferred employees,” the judge wrote.
The dispute stems from the purchase by Barclays of Lehman’s North American broker-dealer following the investment bank’s September 2008 bankruptcy filing. Lehman previously lost a bid to recover what it said was an $11 billion windfall that went to London-based Barclays.
Lehman argued it should be awarded $500 million in damages resulting from Barclays’s failure to meet its obligation to pay the full amount of bonuses. The bonus payments were part of the consideration in the sale, Lehman said.
Peck said in his decision that the $2 billion was only an estimate of the total compensation amounts that were to be assumed by Barclays in the transaction. Lehman no longer has liabilities to the employees for bonuses thanks to the sale and hasn’t suffered damages, Peck said.
“Today’s decision importantly confirms that Barclays acted in good faith in its dealings with Lehman, just as the court held in its February decision rejecting Lehman’s effort to modify the sale order,” Barclays attorney Jonathan Schiller, managing partner of Boies, Schiller & Flexner, said in an e- mailed statement.
Kimberly Macleod, a spokeswoman for Lehman, declined to comment on the ruling.
The main case is In re Lehman Brothers Holdings Inc. (LEHMQ), 08- 13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The lawsuit is Lehman v. Barclays, 09-01731, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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