Lehman Sues Intel Alleging Breach of $1 Billion Swap DealKaren Gullo
Bankrupt Lehman Brothers Holdings Inc. alleged in a lawsuit that Intel Corp., the world’s largest chipmaker, breached a $1 billion swap agreement.
Under a 2008 accord, Intel gave $1 billion to Lehman’s over-the-counter derivatives unit in August of that year in exchange for 50 million shares of its stock, to be delivered on Sept. 29, 2008, according to a complaint filed yesterday in U.S. Bankruptcy Court in Manhattan.
Lehman posted $1 billion in cash collateral to Intel as part of the deal, which specified that in the event of early termination, Intel would be compensated for its losses.
Intel ended the deal two weeks after Lehman filed for bankruptcy protection on Sept. 15, 2008, and seized the $1 billion in cash collateral and has refused to return it, even though its losses on the swap were “far less than $1 billion,” Lehman said in the complaint. Lehman is seeking repayment, plus interest.
“This dispute has been hanging around for years and we think the claims are baseless,” Chuck Mulloy, a spokesman for Santa Clara, California-based Intel, said today by phone.
Lehman filed the biggest bankruptcy in U.S. history in September 2008, listing assets of $639 billion. The defunct investment bank has paid creditors $36.7 billion of the estimated $65 billion it has said it will distribute by around 2016.
The case is Lehman Brothers Holdings Inc. v. Intel Corp., 13-1340, U.S. Bankruptcy Court, Southern District of New York (Manhattan).