IDD Daily Updates and Restructuring Alert Weekly Updates, our email alerts
Lehman Creditors Committee Wants Investigation
The creditors committee asked for court approval authorizing and directing discovery from JPMorgan Chase.
October 6, 2008
The committee of unsecured creditors of Lehman Brothers wants the judge overseeing the storied brokerage’s bankruptcy to allow an investigation of what led to the firm’s downfall and the unsecureds want to know what happened to $17 billion worth of cash and securities Lehman had just prior to its bankruptcy.
Lehman filed for bankruptcy protection on Sept. 15 and had consolidated assets of about $639 billion and liabilities of about $613 billion as of May 31.
In a request filed on Oct. 2, the creditors committee asked for court approval authorizing and directing discovery from JPMorgan Chase. In its request, the Lehman committee of unsecured creditors invoked Bankruptcy Rule 2004 which allows for the “motion of any party in interest, the court may order the examination of any entity.”
“Discovery of JPMC is necessary in order for the creditors’ committee to carry out its statutory authority to investigate the financial affairs of the debtors to discover assets and expose any conduct that may give rise to causes of action of the estate,” counsel for the credit committee said in court documents.
The creditors committee said that on the Friday prior to Lehman’s Sept. 15 bankruptcy petition Lehman had at least $17 billion in excess assets in the form of cash and securities which were held at JPMorgan Chase.
The creditors committee said in court documents that JPMorgan’s refusal to make the $17 billion worth of assets available to Lehman Brothers “may have contributed to LBHI’s [Lehman] liquidity constraints. As such discovery of JPMC is necessary in order to determine the basis for JPMC’s refusal.”
According to court filings JPMorgan was purportedly holding all of Lehman’s assets as a potential offset against any claims it may have had against Lehman. But, the creditor’s committee said in court documents that it “is unaware of how such alleged claims exceeded the assets on hand.”
For more information on related topics, visit the following:
