As a result of auctioning assets to the two banks, Lehman lost $1.2 billion out of total deposits with CME Group Inc. of $2 billion.
Lehman Brothers Holdings Inc. may have grounds to sue Goldman Sachs Group Inc. and Barclays Plc after they obtained assets from CME Group Inc. for less than half their value, bankruptcy examiner Anton Valukas said.
Goldman was the highest bidder for Lehman’s equity derivatives at CME, and took $445 million of those assets at a private auction in September 2008, according to previously censored details of Mr. Valukas’s March 11 report. Barclays was the highest bidder for Lehman’s energy derivatives and took $707 million in assets from CME.
DRW Trading was the highest bidder for Lehman’s foreign exchange, agricultural and interest-rate derivatives, Mr. Valukas said. As a result of the auction to the three successful bidders, Lehman lost $1.2 billion out of total deposits with the CME of $2 billion, Mr. Valukas said.
“The examiner concludes that an argument can be made that the transfers at issue were fraudulent,” Mr. Valukas said in the report. Under bankruptcy law, the auction may be able to be undone, he said.
Lehman received “less than reasonably equivalent value”, Mr. Valukas said in his partly censored March 11 report on the 2008 bankruptcy.
U.S. Bankruptcy Court Judge James Peck on Wednesday agreed to allow previously redacted portions of the report to be unsealed to test the fairness of the auction process. CME had sought to keep the documents confidential.
“The claims of confidentiality are weak,” Mr. Peck said. “The arguments concerning potential future harm to events that may never occur are so speculative as to be discounted close to zero.”
Lehman, which filed for bankruptcy with debts of $613 billion, has had 66,000 claims for payment totaling $899 billion, lawyers told the judge at the hearing. Lehman has said allowable claims may be as low as $260 billion.
Mr. Peck asked Mr. Valukas why his report hadn’t mentioned Hudson Castle, a Lehman affiliate that allowed the investment bank to move $1 billion in risky investments off its balance sheet, according to the New York Times.
“Hudson Capital to our knowledge had become independent of Lehman as of 2004,” Mr. Valukas said. His 2,200-page report focused on 2006 forward, he said.
At the hearing, Mr. Peck approved Lehman’s settlement of disputes over payments on $600 million of swap agreements with Metavante Corp.
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