JPMorgan to pay Lehman $797.5 million to end litigation over collapse
Reuters
Published Feb 01, 2017 05:32PM ET
JPMorgan to pay Lehman $797.5 million to end litigation over collapse
By Jonathan Stempel
NEW YORK (Reuters) - JPMorgan Chase & Co (N:JPM) will pay $797.5 million in cash to end all litigation brought on behalf the former Lehman Brothers Holdings Inc, whose September 2008 collapse triggered a global financial crisis.
The settlement made public on Wednesday requires approval by U.S. Bankruptcy Judge Shelley Chapman in Manhattan.
It follows JPMorgan's agreement last January to pay $1.42 billion in cash to resolve most other claims, in what had been an $8.6 billion lawsuit against the largest U.S. bank to recoup money for Lehman creditors.
JPMorgan, which had been Lehman's largest secured creditor, was accused of exploiting its leverage as Lehman's main "clearing" bank to siphon critical liquidity in the last few days before Lehman went bankrupt on Sept. 15, 2008.
Lehman creditors have maintained that JPMorgan unnecessarily extracted billions of dollars of collateral, and by doing so obtained a windfall at their expense.
In a court filing, lawyers for Lehman said the settlement avoids the uncertainty of continued litigation and millions of dollars of additional legal fees, and is "in the best interests of the Lehman estate and its creditors."
No one admitted wrongdoing, the settlement agreement said.
JPMorgan has already set aside money for the accord, according to a regulatory filing. A hearing to consider approval is scheduled for Feb. 16.
Once Wall Street's fourth-largest bank, Lehman reported $639 billion of assets when it filed for Chapter 11 protection, making its bankruptcy by far the largest in U.S. history.
Lehman emerged from bankruptcy in March 2012, and has since been winding down.
Creditors have recouped more than $110 billion, and bondholders once projected to receive just 21 cents on the dollar have recovered close to twice that sum.
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Written By: Reuters
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