I added you as an assistant moderator. I was sure I had added you previously?? I don't know what happened, or if my mind is going? I thought I had added you, because I made the comment that your charts would be a very welcome addition here. Very glad to have you here ! Mic
Wed Sep 23, 2009 10:47am EDT Email | Print | Share| Reprints | Single Page[-] Text [+] Market News Wall Street markets edge lower on oil ahead of Fed | Video Dollar edges up, trading cautious ahead of Fed | Video Oil drops $3 on surprise U.S. stock build More Business & Investing News... Featured Broker sponsored link NEW YORK, Sept 23 (Reuters) - A decision by a New York bankruptcy court in a dispute involving Lehman Brothers (LEHMQ.PK) is likely to make it harder for companies that have derivatives trades with the firm to keep the contracts open yet avoid making payments due to the bank's failure. The court found last week that Metavante Technologies (MV.N), which had an interest rate swap with Lehman, must continue to make payments on the contract, after the company chose not to exercise an option to terminate the swap upon Lehman's failure.
Metavante, a provider of banking and payment technology, had argued that it should not be required to make payments on the contract because Lehman's default left it without an effective counterparty.
The firm also argued that as the non-defaulting party it had the option to wait to terminate the trade until market conditions favored the company.
"The court is saying that while you don't have to designate an early termination you then have to perform, and if you do elect to terminate under the safe harbor you have to do so within a reasonable amount of time after the bankruptcy occurs," said Richard Schetman, partner at law firm Cadwalader, Wickersham & Taft in New York in a comment on the decision.
Derivatives, contracts that are based on the value of an underlying asset, benefit from a safe harbor provision that allows trade counterparties to terminate the contracts in the event of a default.
The contracts, however, don't typically specify a deadline for announcing an intention to terminate the trade.
"This case provides some clarity on the application of the swap safe harbor, though my sense is that the large majority of counterparties have previously terminated their Lehman trades," said Schetman.
Lehman has sued counterparties including American International Group (AIG.N) for using its bankruptcy as a means to avoid making payments on derivatives, which it says violates U.S. bankruptcy code. For details, see [ID:nN12164349]
The case was heard in the U.S. Bankruptcy Court for the Southern District of New York. (Reporting by Karen Brettell; Editing by Theodore d'Afflisio)
(DJ Ex-Lehman Execs McDade, Kirk Set To Launch Fund -NY Post)
DOW JONES NEWSWIRES
Former Lehman Brothers Holdings Inc. president and operating chief Herbert "Bart" McDade is teaming with one of the bankrupt firm's former top traders, Alex Kirk, to launch an investment fund named River Birch Capital, the New York Post reports Wednesday. Kirk, who has expertise in distressed assets and fixed-income debt including high-yield securities, didn't return calls seeking comment.
McDade, a former Lehman president, helped integrate the firm's U.S. capital markets business with Barclays Capital after U.K.-based Barclays PLC (BCS) bought the unit out of bankruptcy protection in September 2008.
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