Lehman Brothers vs. JPMorgan Conflicts with Safe Harbor Law

Bankruptcy Lawyers of Lehman Brothers may face difficulties as on April 19, 2012, JPMorgan Chase & Co., won dismissal of some of Lehman’s claims over $8.6 billion it wants back.

US. Bankruptcy Judge James Peck cited that Lehman cannot claim various sums transferred to JPMorgan, since it is governed by the so-called safe harbor law, which is devised to protect large banks against weak companies.

According to the suit, Lehman claimed that the New York-based lender helped coordinated its collapse, since 2008, by demanding $8.6 billion in collateral, a big amount which devastated the company’s finances. 

Further allegations include inside job issues, as Lehman claimed that JPMorgan grabbed assets for itself at a critical time in its banking relationship with the company, according to the plaintiff’s Bankruptcy Lawyer.

While JPMorgan tries to move the case to a district judge, saying it raises legal issues beyond the jurisdiction of a bankruptcy judge. Lehman denied the move, proclaiming that Peck can’t rule on Lehman’s allegation that JPMorgan caused monetary damage to failing Lehman in 2008, the bank has said. Furthermore, the company firmly stated that the suit confines itself to bankruptcy matters.

As debates are ongoing for both sides on whether which court has the right to the case, U.S. District Judge Richard Sullivan in New York is “working on” a decision on whether Lehman’s suit belongs in district court, according to court papers. Peck should rule first on JPMorgan’s move to dismiss the case, Sullivan told both sides, according to a transcript of a Dec. 30 court session.

Well Bankruptcy Lawyers would find it very interesting on whether the case would develop further or stay on debates. But, regarding the impact of the suit, this would probably reach the international economy as one of the largest companies makes battle with the number 1 bank of America.

Company history

Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA doing business in banking, investment equity and fixed-income sales and trading, research, investment management, private equity, and private banking.

On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. “The filing marked the largest bankruptcy in U.S. history, and is thought to have played a major role in the unfolding of the late-2000s global financial crisis”, says a district Bankruptcy Lawyer.