Lehman to appeal order validating Barclays sale

Fri Jul 29, 2011 4:44pm EDT

* Says sale afforded Barclays $11 billion "windfall"

* Judge ruled sale was "imperfect," but not unfair

NEW YORK, July 29 (Reuters) - Lehman Brothers Holdings Inc LEHMQ.PK will appeal a court order upholding the rushed sale of its North American business to Barclays PLC (BARC.L) nearly three years ago, a deal Lehman said afforded Barclays an $11 billion "windfall."

In court papers filed late Thursday in U.S. Bankruptcy Court in Manhattan, Lehman said it will appeal to Manhattan federal court the February ruling from Judge James Peck, who presides over Lehman's bankruptcy.

Lehman was expected to appeal the matter, aspects of which have already been appealed by Barclays and by the trustee liquidating Lehman's brokerage.

Lehman's creditors' committee also filed an appeal notice Thursday, saying it would seek review of a related order rejecting the committee's objections to the Barclays deal.

A Lehman spokeswoman declined to comment. A Barclays spokeswoman said the company did not have a statement.

Lehman said Barclays got a sweetheart deal in acquiring its U.S. investment banking and brokerage operations in the days following its filing of the biggest bankruptcy in U.S. history. It said Barclays failed to make key disclosures in the $1.85 billion deal, resulting in a windfall of about $11 billion.

Peck called the sale process "imperfect," but said any disclosure lapses were not serious enough to affect the fairness or outcome of the sale.

James Giddens, the bankruptcy trustee for Lehman's brokerage, a week ago appealed a separate aspect of Peck's ruling entitling Barclays to $1.1 billion in money held to facilitate the clearance of securities trading.

A week before that, Barclays appealed still another element of the ruling handing the trustee $4 billion in so-called margin assets, collateral Lehman posted to cover outstanding derivatives trades.

Lehman declared bankruptcy on Sept. 15, 2008, listing $639 billion in assets, six times more than any other bankrupt U.S. company. The filing was a major factor in the financial crisis.

It is scheduled to ask Peck on Aug. 30 for authority to hold a creditor vote on a roughly $65 billion payout plan to exit bankruptcy.

The case is In re Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555. (Reporting by Nick Brown. Editing by Robert MacMillan)

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