Lehman Brothers European unit loses bid to recoup $485 million from bond insurer

By Jonathan Stempel

NEW YORK (Reuters) – A New York judge rejected a bid by the former Lehman Brothers bankrupt European unit to claw back $485 million from bond insurer Assured Guaranty Ltd over transactions that were canceled amid the global financial crisis.

In a decision on Wednesday, Justice Melissa Crane of a New York state court in Manhattan said Assureds AG Financial Products unit instead deserved to recover about $20 million from Lehman Brothers International (Europe).

The case stemmed from Assureds July 2009 termination of 28 credit default swaps on which Lehman had bought credit protection.

Lehman and Assured disagreed on how to calculate the “loss” from the terminations.

Crane said Lehmans calculation, based on hypothetical market prices estimated by its experts, was not reasonable because the financial crisis has “so disrupted” markets that accurate prices did not exist.

“By putting all its eggs in the market price basket, LBIE has failed to show both that Assured‘s valuation was unreasonable, and that its own valuation was reasonable,” the judge wrote. “Meanwhile, Assured’s valuation was reasonable and calculated in good faith.”

Crane ruled after a five-week nonjury trial held in late 2021.

Lehman had sought $1.4 billion when it sued Bermuda-based Assured in November 2011. Some claims were dismissed before trial.

Lawyers for Lehman did not immediately respond to requests for comment on Thursday. Assureds lawyers in a statement called the decision a “significant victory.”

The Sept. 15, 2008 bankruptcy of Lehman Brothers Holdings Inc – once Wall Street‘s fourth-largest investment bank – was one of the major triggers of that year’s financial crisis. Lehmans bankruptcy remains by far the largest in U.S. history.

2008 年 9 月 15 日雷曼兄弟控股公司（曾经是华尔街第四大投资银行）的破产是当年金融危机的主要导火索之一。雷曼兄弟的破产仍然是美国历史上最大的破产案。

The case is Lehman Brothers International (Europe) v. AG Financial Products Inc, New York State Supreme Court, New York County, No. 653284/2011.

(Reporting by Jonathan Stempel in New York; Editing by Hugh Lawson)