February 27, 2014 / 5:30 PM / in 4 years

Lehman deal clears way for closure of Swiss settlement

(Reuters) - Lehman Brothers Holdings Inc’s bankruptcy estate has struck a deal to resolve a five-year-long dispute involving its Swiss affiliate, clearing the way to distribute $1.8 billion to creditors.

The deal would enable the estate of Lehman to resolve one of its largest outstanding claims since the investment bank’s September 2008 collapse, a major spark in the global financial crisis, and close a settlement from last year with Lehman Brothers Finance AG, the Swiss affiliate that specialized in equities derivatives.

The settlement with the Swiss unit was approved by the U.S. Bankruptcy Court in Manhattan in April.

But entities controlled by Klaus Tschira, who founded German software giant SAP (SAPG.DE), appealed to Swiss regulators and courts, preventing the settlement from closing while he was engaged in his own dispute with Lehman’s Swiss unit.

Under the deal disclosed in U.S. Bankruptcy Court papers on Wednesday, the Tschira entities will drop their Swiss appeal, in return for an unspecified claim against the U.S. Lehman estate.

In addition, the U.S. estate dropped a lawsuit it filed in August that sought 100 million euros ($136.7 million) from the Tschira entities. Lehman said Tschira received the amount from the investment bank the day before its September 15, 2008 bankruptcy.

Lehman said if Judge Shelley Chapman approves the deal by March 5, $1.8 billion could be distributed to Lehman creditors at the next distribution, which is expected at the end of March.

    Still unresolved is a dispute between Lehman’s Swiss unit and Tschira over the termination of derivatives deals relating to Tschira’s SAP stock. The Swiss unit believes Tschira owes it 186 million euros, while Tschira has claimed the Swiss unit owes him more than 500 million euros.

    The value of that claim will be determined through litigation, but it will no longer bar the U.S. estate from closing the Swiss settlement.

    The case is In Re: Lehman Brothers Holding Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555

    Reporting by Tom Hals in Wilmington, Delaware; Editing by Grant McCool

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