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Lehman chief denounces ‘flat-out silly’ claims

From The Times
November 19, 2009
Michael Herman

Creditors of Lehman Brothers had filed claims for the return of $824 billion (£492 billion) and total claims might reach $1 trillion, the chief executive of the investment bank said yesterday.

Bryan Marsal, a restructuring expert who was installed as chief executive to run Lehman in administration, told a hearing in New York that some creditors’ claims were “just flat-out silly”.

Mr Marsal said that the bank probably would call on a US bankruptcy judge to decide on claims that Lehman believes are overstated.

Without mentioning names, Mr Marsal told the court hearing that Lehman’s biggest and most sophisticated creditors were among those making inflated claims.

Lehman’s largest creditors include JP Morgan, Deutsche Bank and Fannie Mae. Lehman Brothers International, the European division of the bank, is its largest creditor, with administrators claiming about $200 billion from the American parent.

Mr Marsal said that Lehman aimed to have evaluated all claims by the end of the month and that it held $16 billion in cash. He is chief executive of Alvarez & Marsal, the turnaround specialist brought in to advise Lehman’s administrators.

Court filings show that the firm charged almost $170 million in fees in the 12 months after Lehman’s collapse. It said that it had 175 full-time employees working on unwinding Lehman’s business, which includes thousands of frozen derivatives trades.

Hundreds of legal claims have been filed in the UK and the US since Lehman failed on September 15, 2008, in the largest bankruptcy in history.

This week Lehman’s administrators filed a lawsuit against Barclays Capital seeking the return of up to $10 billion allegedly transferred to the UK bank in the days after Lehman’s collapse.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6922300.ece