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Bank of America sues Lehman units over collateral
NEW YORK (Reuters) - Bank of America Corp (BAC.N) has sued three Lehman Brothers Holdings Inc (LEHMQ.PK) units to recover nearly $500 million provided as collateral for derivative transactions.
The lawsuit in New York State Supreme Court on September 26 is one of several legal actions pending against Lehman since it became the largest bankruptcy in U.S. history on September 25 amid Wall Street's worst financial crisis in decades.
Bank of America's lawsuit said it sought $468,028,363 plus accrued interest of more than $350,000 from three Lehman affiliates.
It said none of the three had filed for bankruptcy and are not restricted by the holding company's bankruptcy from returning the money provided for derivative transactions.
"Although the transactions were terminated on September 15, 2008, and although the Lehman Entities have not requested any payment or collateral from BoA, the Lehman Entities have refused repeated demands to return the collateral to BoA, stating only that the accounts have been 'frozen'," the lawsuit said.
A spokesman for Lehman declined immediate comment.
One hedge fund, Bay Harbour Management of New York, has said it will challenge the Lehman bankruptcy and its sale to the brokerage arm of Barclays Capital Plc BARCBC.UL(BARC.L) in federal court.
Two other hedge funds, Amber Capital Investment Management in New York and European hedge fund GLG Partners Inc (GLG.N) have objected to the sale, according to court documents.
They alleged $8 billion may have been transferred by the holding company from Lehman Brothers International (Europe) just before the holding company filed for bankruptcy.
Bank of America's lawsuit cites an affidavit in the bankruptcy proceedings asserting the $8 billion was intended for other Lehman affiliates.
One entity, Lehman Brothers Special Financing Inc of New York had $356.7 million in collateral provided by Bank of America, the lawsuit said. It said Lehman Brothers Finance SA of Zurich, Switzerland had $59.6 million and Lehman Brothers Commodity Services Inc in New York had $51.7 million.
(Reporting by Grant McCool; Editing by Andre Grenon)
