Lehman Sues Federal Home Loan Bank Over $150 Million PayoutErik Larson
Lehman Brothers Holdings Inc. sued the Federal Home Loan Bank of New York, claiming it failed to pay out more than $150 million when it terminated swaps in 2008 as the remnants of Lehman’s estate seek cash to pay creditors more than six years after its collapse.
The Federal Home Loan Bank terminated 356 mostly interest-rate swaps for Lehman Brothers Special Financing Inc. three days after the parent’s bankruptcy filing on Sept. 15, 2008, according to a complaint filed in U.S. Bankruptcy Court in Manhattan Wednesday. The lender allegedly complicated the matter by filing a $130 million claim in the bankruptcy case.
The government-backed bank’s valuation of the swaps “was commercially unreasonable and inconsistent,” Lehman said.
Lehman and its brokerage unit began separate bankruptcies in September 2008. The New York-based parent’s reorganization plan was approved in December 2011 and implemented in March 2012.
Brian Finnegan, a spokesman for the home loan bank, declined to comment on the lawsuit.
The holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-bk-13555; the brokerage liquidation is Securities Investor Protection Corp. v. Lehman Brothers Inc., 08-01420, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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