The court has ruled in favor of Barclays and refused to hear an appeal by Lehman’s creditors.
This ruling left intact a federal appeals court ruling that was also in favor of Barclays. It recognized that Barclays acquired most of Lehman’s North American brokerage assets as part of a hurriedly drafted purchase agreement in September 2008.
The legal battle between the two sides began in 2009 when the Lehman brokerage and its parent company both sued Barclays claiming that the bank negotiated a secret discount when it bought Lehman’s brokerage.
Around $3.5bn of the disputed amount was already under Barclays’ control.
Trustee James Giddens had been trying to recover the amount and had argued in court that allowing Barclays to keep the $4bn could result in long-term damage to the section of the bankruptcy code that mandates a trustee to sell debtor’s assets outside the ordinary course of business, reported The Wall Street Journal.
A spokesman for Giddens, Kent Jarrell said: "We are disappointed but remain focused on continued progress in winding down and closing out the LBI estate. The trustee appropriately reserved for the Barclays litigation, so the decision does not impact distributions already completed or assets on hand for potential additional distributions to unsecured general creditors."
Before it went bankrupt in 2008, Lehman had assets worth $639bn and was the fourth-largest investment bank in Wall Street.
Image: The former headquarters of Lehman Brothers in New York City that is now owned by Barclays. Photo: courtesy of David Shankbone.
