Complaint attached below…
NEW YORK (Reuters) – A unit of Lehman Brothers Holdings Inc (Other OTC:LEHMQ.PK – News), which filed the largest U.S. bankruptcy, has sued Bank of America Corp (NYSE:BAC – News) and a Barclays Plc (LSE:BARC.L – News) affiliate to stop the liquidation of $150 million of collateral that Lehman says belongs to creditors.
Lehman Brothers Special Financing Inc said in the lawsuit it is a party to swap agreements related to a collateralized debt obligation for which Bank of America serves as trustee and Long Island International Ltd, the Barclays affiliate, is a “controlling” investor.
Lehman said it has a “priority payment right” to collateral tied to the CDO, Ceago ABS CDO 2007-1, but that Bank of America’s actions allow Long Island to direct that the swap agreements be terminated and the collateral liquidated.
This, Lehman said, would violate U.S. bankruptcy law, and “cost the bankruptcy estate and its creditors approximately $150 million,” according to the complaint filed in the U.S. bankruptcy court in Manhattan on Monday night.
Full complaint below…