Barclays will appeal a US court ruling that it must turn over $2bn (£1.2bn) in cash to the estate of bankrupt Lehman Brothers, whose broker-dealer business it bought at the height of the stock market panic in 2008.
The two sides have been fighting for more than two years over the details of that transaction, including over whether Barclays paid an unfairly low price, and the outcome of the appeal could determine whether the British bank must write down hundreds of millions of dollars in disputed assets.
A Manhattan judge ruled that the takeover price was fair, but that Barclays is not entitled to all of the assets that it believes were covered by the transaction. Barclays has already recognised on its balance sheet a total of £2bn of £2.6bn of assets that it has not yet received.
The latest legal ruling, clarifying a February judgment, said that not only must Barclays hand over $2.054bn in a margin account, but that it must pay the Lehman estate 5 per cent annual interest on the money. The Lehman estate, which is trying to recover as much money as possible to return to the investment bank's creditors, had argued Barclays should pay 9 per cent.
"We are pleased with the court's February ruling that upheld the sale of Lehman Brothers' North American business," Barclays said in a statement yesterday. "We are also pleased that the trustee has agreed to transfer $1.1bn in trading assets to Barclays. However, there are aspects of the ruling with which we disagree and which we will appeal."
But William Maguire, attorney for the trustee, James Giddens, said: "The ruling brings finality to this issue by confirming that the $4bn in Lehman cash and other margin assets belongs to the trustee."
An appeal by Barclays could extend the dispute by another six months or more, lawyers said.
Barclays bought the Lehman Brothers US broker-dealer business and many of its trading assets out of bankruptcy in September 2008 in one of the most audacious – and ultimately lucrative – deals of the credit crisis. The acquisition instantly turned Barclays into a Wall Street powerhouse.Reuse content