May 2 Bankrupt investment bank Lehman Brothers
has sued Intel Corp, accusing the chip maker of seizing
$1 billion in collateral in breach of a swap agreement, a court
Under the swap agreement, executed days before Lehman filed
for bankruptcy in 2008, Intel gave $1 billion to a derivatives
unit of Lehman Brothers in exchange for 50.5 million Intel
shares, to be delivered on the settlement date of Sept. 29,
2008, according to the filing made in a New York bankruptcy
The unit, Lehman Brothers OTC Derivatives Inc (LOTC), posted
$1 billion in cash collateral to Intel also as part of the
agreement. The agreement specified that Intel would be
compensated for losses in case of early termination of the deal.
According to the filing, Intel maintained that Lehman was to
deliver "$1 billion in Intel common stock," but Lehman argued
that the agreement was to deliver 50.5 million of Intel shares
irrespective of the dollar value.
"The value of 50,552,943 shares of Intel common stock on
Sept. 29, 2008 was about $873 million, not $1 billion," Lehman
Intel terminated the agreement two weeks after the company's
bankruptcy filing on Sept. 15, 2008, and seized the entire $1
billion in collateral and has not returned it, Lehman said in
By seizing the collateral in its entirety, Lehman said
"Intel breached the swap agreement."
Lehman is looking to recover from Intel an unspecified
amount to be determined at trial.
Intel could not immediately be reached for comment by
Reuters outside of regular U.S. business hours.
Lehman filed the largest-ever U.S. bankruptcy on Sept. 15,
2008, with $639 billion in assets. It is in the midst of
repaying about $65 billion to creditors under a liquidation plan
approved in late 2011.
The case is in re Lehman Brothers Holdings Inc et al vs
Intel Corp, Case No. 13-01340, U.S. Bankruptcy Court, Southern
District of New York.