Lehman Brothers Holdings Inc. (fka LEHMQ)

[El Mago]

Lehman creditors seek to probe firm:

Report
Friday October 3, 9:37 pm ET


NEW YORK (Reuters) - Unsecured creditors of Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK - News) asked a court overseeing Lehman's bankruptcy proceedings for permission to investigate how the firm ran out of money, The Wall Street Journal reported on its website on Friday.



The group said that JPMorgan Chase & Co (NYSE:JPM - News), which acted as a middleman between Lehman and other lenders, helped spark a liquidity crisis at Lehman before it filed Chapter 11 bankruptcy proceedings earlier this month, the Journal reported.

The group made the allegation in a filing with the federal bankruptcy court in New York, the Journal reported.

"These assertions raised by the creditors' panel are unfounded conjecture," JPMorgan said in a statement released to the Journal. "We will address them at the appropriate time in bankruptcy court."

According to the court filing, about $17 billion in Lehman cash and securities were being held at J.P. Morgan as collateral, the Journal reported. In its claim, the creditors group alleges that J.P. Morgan "withheld $17 billion in excess assets" from Lehman Brothers "in the days just prior to the bankruptcy filing," the paper said.

The creditors say that refusing to make the assets available to Lehman might have contributed to Lehman's cash problems, the paper said.

JPMorgan and Lehman representatives were unavailable for comment.

(Reporting by Robert MacMillan; editing by Carol Bishopric)