Citigroup Agrees to Pay Lehman $360 Million in Collateral to Settle Dispute

by San Antonio Attorney

Citigroup Inc reached an agreement with Lehman Brothers to pay $360 million to settle a dispute over $1 billion in collateral that the investment bank had sought to recover. Lehman was forced to post the collateral days before it filed bankruptcy on Sept. 15, 2008.

Based on Friday’s agreement with the trustee of Lehman’s brokerage unit, the $75 million claim of Citigroup will also be relinquished, according to court documents.

James Giddens, the trustee liquidating Lehman, filed the $1 billion claim against the financial services firms and also its subsidiaries last year, saying that the huge amount was acquired by force and that the money ought to be included in Lehman’s estate to be distributed among creditors in line with the bankruptcy law.

Citigroup argued that it is allowed to retain the $1 billion according to the safe harbor provisions of the Bankruptcy Code, which protect some financial transactions from being placed into the bankruptcy estate.

In a statement released by Giddens, he said they will continue to settle disputes and pool assets for the sake of the customers and creditors.

The trustee also said in a court filing that if the litigation is dragged on through the court because of the collateral dispute, as well as the legal costs involved, it would not be in the Lehman estate’s best interests. The agreement between Lehman and Citigroup is subject to the approval of the court.

After more than three years, Lehman emerged from bankruptcy protection in March. It plans to pay a total of $33 billion to creditors, who will be receiving around 21¢ for every $1.

Last month, Lehman Brothers Holdings Inc’s European unit and U.S. brokerage unit agreed to pay $38 billion claims to settle a lawsuit.

– Companies facing bankruptcy have options. The business owner can restructure to repay debts,  close the company and sell its assets, or continue the operations and buy more time to pay debts. If you think your business is heading to bankruptcy or you are planning to file for bankruptcy, hire a San Antonio Lawyer who is an expert in business bankruptcy.

 

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