San Francisco - A JPMorgan Chase & Co unit has reached an agreement to pay $1.42bn to resolve claims it took advantage of its status as Lehman Brothers Holdings' primary lender to unfairly extract cash and position itself ahead of other creditors in Lehman’s bankruptcy.
Lehman Brothers said the settlement resolves two of the three major pieces of litigation with JPMorgan left over from its 2008 bankruptcy. The agreement settles Lehman’s $6.3bn in clearing-related claims and $2.3bn in derivatives claims, according to a filing on Monday in Manhattan federal court.
Lehman said in the filing that the settlement will allow it to make additional payments of $1.496bn to creditors.
In October, a judge threw out most of Lehman’s claims to $8.6bn taken as collateral by JPMorgan. Lehman has contended that the bank’s demands helped force it into its $613bn bankruptcy, the largest in US history.
Lawyers for Lehman and a creditors’ committee on Monday asked a federal judge in New York to approve the settlement.
Brian Marchiony, a JPMorgan spokesperson, declined to comment on the agreement.
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