Lehman Brothers opposes brokerage's settlement with German unit
April 8 (Reuters) - Lehman Brothers Holding Inc has asked a U.S. bankruptcy court judge to reject a "grossly inflated" proposed settlement that its former brokerage agreed with a Lehman subsidiary in Germany.
The proposed settlement would give Lehman Brothers Bankhaus AG a low-priority, $600 million unsecured claim against Lehman Brothers Inc, the former brokerage.
The holding company said it was basing its objection on information that was not disclosed in public settlement papers, which could invite other creditors to oppose the settlement.
The objection follows a settlement last year between the holding company and former brokerage that resolved disputes over billions of dollars of claims.
The brokerage's deal with Lehman Brothers Bankhaus AG settles claims stemming from a reverse repurchase agreement the two entered prior to the Lehman Brothers Holding bankruptcy in September 2008.
The holding company said that "the proposed settlement agreement is grossly inflated and unjustified."
Jake Sargent, a spokesman for the brokerage trustee, James Giddens, said the objection was part of the process. "We are confident the ultimate agreement will be in the best interests of customers and other creditors."
Giddens has requested a hearing for April 24 to ask Judge James Peck of the U.S. Bankruptcy Court in Manhattan to approve the settlement.
Giddens has said that he expects all of LBI's former customers to be repaid in full. Giddens has not estimated what low-priority general unsecured claims will be paid.
Once Wall Street's fourth-largest investment bank, Lehman filed for bankruptcy protection on Sept. 15, 2008, during the financial crisis. Lawyers and advisers have spent years unwinding the various claims that Lehman businesses have against one another.
The brokerage case is In re: Lehman Brothers Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-01420; and the holding company bankruptcy is In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.