Lehman case big creditor: JPMorgan
Posted on Saturday, September 27, 2008
JPMorgan Chase & Co., the biggest U. S. bank by deposits after buying the deposits and branches of collapsed savings and loan Washington Mutual Inc., is also the largest secured creditor of failed investment bank Lehman Brothers Holdings Inc.
JPMorgan has an estimated claim of $ 23 billion, according to court papers filed Thursday in U. S. Bankruptcy Court in Manhattan. Lehman also owes $ 3 billion to Fenway Funding, an affiliate of New York-based Hudson Castle Group Inc., $ 1. 35 billion to Swedbank AB and $ 1 billion to Boston-based State Street Corp., according to the filing.
“The amount claimed doesn’t constitute an admission of liability by, nor is it binding on” Lehman, lawyers for the bankrupt, New York-based bank said in the filing.
Lehman, once the fourthlargest U. S. investment bank, filed the largest bankruptcy in history Sept. 15 with estimated debt of $ 613 billion as of May 31. In bankruptcy, secured claims are backed by collateral and are typically paid before most other debt, giving a company’s secured creditors a strong position in guiding the case.
JPMorgan on Thursday agreed to pay $ 1. 9 billion for deposits and branches of Seattlebased Washington Mutual, the biggest U. S. savings and loan. The New York-based bank had provided about $ 138 billion to settle trades at Lehman’s brokerage after its bankruptcy filing. Those loans were covered by the Federal Reserve Bank of New York.
JPMorgan spokesman Jennifer Hanley and Shawn Kodes, a Fenway spokesman, didn’t immediately return calls Friday for comment.
Swedbank’s $ 1. 35 billion claim is backed by loans on commercial property, about 40 percent of which is being redeveloped or is under construction, the Stockholm-based bank said in a statement.
“According to our assessment, we will get our money back,” the bank stated.
Carren Shulman, a partner at the law firm Sheppard Mullin in New York who often represents creditors, said a security interest in real estate is better than one based on securities.
“Real estate can go down, but eventually it will come back,” Shulman said.
Lehman owes its 10 largest unsecured creditors more than $ 157 billion, including debt to bondholders totaling $ 155 billion, and $ 1. 62 billion to at least seven Japanese lenders, according to court filings.
The collapsed bank won federal court approval Sept. 20 to sell its North American business to London-based Barclays PLC for $ 1. 54 billion. The sale included Lehman’s headquarters building and two data centers in New Jersey.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U. S. Bankruptcy Court, Southern District of New York (Manhattan ). Information for this article was contributed by Jeff St. Onge, Kevin Crowley, Tiffany Kary and Niklas Magnusson of Bloomberg News.
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