Lehman Brothers' European unit loses bid to recoup $485 million from bond insurer
Reuters
Published Mar 09, 2023 11:44AM ET
Updated Mar 09, 2023 02:31PM ET
By Jonathan Stempel
NEW YORK (Reuters) - A New York judge rejected a bid by the former Lehman Brothers' bankrupt European unit to claw back $485 million from bond insurer Assured Guaranty (NYSE:AGO) Ltd over transactions that were canceled amid the global financial crisis.
In a decision on Wednesday, Justice Melissa Crane of a New York state court in Manhattan said Assured's AG Financial Products unit instead deserved to recover about $20 million from Lehman Brothers International (Europe).
The case stemmed from Assured's July 2009 termination of 28 credit default swaps on which Lehman had bought credit protection.
Lehman and Assured disagreed on how to calculate the "loss" from the terminations.
Crane said Lehman's calculation, based on hypothetical market prices estimated by its experts, was not reasonable because the financial crisis has "so disrupted" markets that accurate prices did not exist.
"By putting all its eggs in the market price basket, LBIE has failed to show both that Assured's valuation was unreasonable, and that its own valuation was reasonable," the judge wrote. "Meanwhile, Assured's valuation was reasonable and calculated in good faith."
Crane ruled after a five-week nonjury trial held in late 2021.
Lehman had sought $1.4 billion when it sued Bermuda-based Assured in November 2011. Some claims were dismissed before trial.
Lawyers for Lehman did not immediately respond to requests for comment on Thursday. Assured's lawyers in a statement called the decision a "significant victory."
The Sept. 15, 2008 bankruptcy of Lehman Brothers Holdings Inc - once Wall Street's fourth-largest investment bank - was one of the major triggers of that year's financial crisis. Lehman's bankruptcy remains by far the largest in U.S. history.
The case is Lehman Brothers International (Europe) v. AG Financial Products Inc, New York State Supreme Court, New York County, No. 653284/2011.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.