Lehman Brothers trustee James Giddens filed a lawsuit against Citi’s Citibank unit in bankruptcy court today, demanding $1.3 billion for the failed firm’s creditors, Bloomberg reports.
According to Bloomberg,
More than $1.3 billion in cash and other assets now held by Citibank and affiliates should go to creditors.
Citibank has no right to keep a $1 billion deposit, given to it for foreign exchange settlement services, the trustee said.
In terms of precedent, BofA had to give back $500 million in deposits to the Lehman trustee in November.
Giddens’ complaint alleges that “Lehman’s brokerage owed Citibank over $15 billion, accumulated between Sept. 15, 2008, and Sept. 19, 2008, and Citibank seized the amount to reduce the obligations.”
Citi says the suit is without merit and that it endured losses of $1 billion for extending credit to the now-collapsed bank. The firm will fight to recoup its losses.