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Even after bankruptcy, Lehman Brothers is still trying to claw back what millions (or in this case, billions) it still can.The Wall Street Journal has a good overview of how the remains of Lehman Brothers, Lehman Brothers Holdings Inc’s estate, is suing JP Morgan, alleging that Jamie Dimon and his pals squeezed Lehman for $8.6 billion in collateral back in September of 2008.
Lehman in turn suffered a liquidity squeeze and was forced out of business. But the ghost of Dick Fuld will not rest until Lehman’s estate recoups some of that money. Here’s the breakdown of what’s happening:
- Lehman estate suing JP Morgan over alleged collateral squeeze in Sept. of ’08.
- Bankruptcy court examiner says Lehman might be able to claw back up to $6.9 billion of the original $8.6 billion pledged to JP Morgan.
- JP Morgan was one of the few firms still lending/dealing with Lehman before and after its bankruptcy.
- Lehman calls JP Morgan the “ultimate insider”
And while the WSJ reports that Lehman does have a case, Zerohedge begs to differ:
From our original report, here is probably the most memorable quote of the total chaos reigning as Lehman was sinking:
Chaos reigned throughout Thursday evening. You sent another $40 billion in cash. Billions of dollars of securities were sent out and many were “DK’d” or otherwise sent back. By about 11 o’clock, when DTC shut down, you had apparently received a net total of approximately $42.7 billion of securities. All of the confusion was heightened by the absence of any definitive list of securities you were purchasing – an absence that we believe further supports the notion that you were taking all of the securities collateralizing our intraday advances.
And this environment is what Lehman will base a legal case on? Good luck.
Even after its bankruptcy, Lehman has continued to run into multiple problems (Repo 105, anyone?), so we don’t envision a jury being too sympathetic over JP Morgan’s alleged “ultimate insider” squeeze.
Below, a copy of the lawsuit in full:
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