LawFuel.com – American Lawyer News – More than a year after the financial crisis reshaped Wall Street, there are still a lot of unanswered questions about how certain deals were crafted. Some of the questions will be answered in court where billions of dollars are at stake. Take, for example, Barclays’s purchase of the North American operations of Lehman Brothers last September. The deal was approved by the bankruptcy court in New York shortly after midnight Sep. 20, and closed two days later.
It was only a matter of time before objections about the deal were raised. And so on Monday, the estate of Lehman Brothers, represented by Jones Day, filed a suit in New York bankruptcy court against Barclays, claiming that amidst the chaos surrounding the deal, Barclays was given an undisclosed $5 billion discount off the book value of assets transferred to the bank. The suit alleges that certain Lehman executives kept the company’s board out of the loop about the side deal.
As The Am Law Daily’s Zach Lowe reports, the suit came as no surprise. Jones Day, which is acting as special counsel to Lehman for certain matters, first raised the allegations about the $5 billion in September when it asked Judge James Peck to modify the terms of the sale. Jones Day then alleged, as it does in the complaint, that Lehman’s bankruptcy counsel at Weil, Gotshal & Manges were not made aware of the $5 billion deal.
Boies, Schiller & Flexner, representing Barclays, is checking up on that claim. The firm has subpoenaed documents from Weil attorneys relating to Lehman’s motion to modify the terms of the sale. According to a report by Lowe, Weil has been turning over documents previously protected by the attorney-client privilege.