[1]Once the fourth-largest investment bank, Lehman Brothers Holdings Inc [2]. was hit hard by the subprime mortgage crisis and filed bankruptcy in 2008. According to the Wall Street Journal [3], the company is making headlines again by filing suit against three financial institutions—Syncora Holdings Ltd., U.S. Bancorp, and GreenPoint Mortgage Funding, Inc.—in an attempt to disallow “duplicate” claims emerging from crisis-era loans.
When Lehman filed for bankruptcy in 2008, it became the largest bankruptcy filing in U.S. history. Alvarez & Marsal, Inc., managed Lehman’s assets until the company was reorganized. While Syncora and U.S. Bancorp are the primary parties named in the suit, the Wall Street Journal explained that that the loans in question were first made by GreenPoint Mortgage Funding, Inc., Syncora and U.S. Bank are suing GreenPoint in a separate proceeding regarding the same toxic mortgages in question.
According to the Journal Leman stated that:
“These claims, which Lehman has been trying to resolve over the past two years, continue to impede the administration of the plan and the orderly distribution of assets. Among other demands in the nine-count complaint, Lehman wants Judge Shelley C. Chapman to disallow the U.S. Bank claim, arguing U.S. Bank’s argument is with GreenPoint. It is also asking Judge Chapman to disallow the Syncora claim, saying it is a duplicate of the U.S. Bank claim. If the judge doesn’t do that, Lehman wants the claims estimated at zero dollars. Lehman also wants the judge to declare that GreenPoint, and not Lehman, is liable for the claims.”
According to the Journal, Lehman Holdings and its subsidiaries have already returned about $100 billion to creditors and have set aside $600 million to cover the claims filed by Syncora and U.S. Bank.
Source: The Wall Street Journal