The administrators of the US brokerage division of Lehman and the bank’s European arm struck a deal that covers $38bn (£23bn) of claims against each other. It brings to an end almost four years of legal battles between the two sides.
“To say the agreement is very significant is to understate it,” said Tony Lomas, administrator for Lehman Brothers International Europe (LBIE), the London arm of the bank. “It has literally taken three and a half years of constant work.”
Administrators on both sides of the Atlantic have been working to liquidate and distribute Lehman’s remaining assets since the bank filed for bankruptcy in September 2008. Its decision to file was the trigger for the most tumultuous stretch of the financial crisis, in which banks in London and on Wall Street turned to taxpayers for bail-outs.
Under the deal, Lehman Brothers Inc (LBI), the US brokerage arm of the bank, will waive a $13.8bn claim it had against LBIE. Meanwhile, a $15bn claim LBIE had against its US counterpart has been cut to $7.5bn. The London arm will also receive $4bn from a property claim it had against LBI.