Hedge Funds Fail To Block Barclays-Lehman Deal

Sep 22 2008 | 2:44am ET

A trio of hedge funds have lost their bid to block the sale of bankrupt Lehman Brothers Holdings’ North American investment banking group to Barclays.

Following an extraordinary, late-night hearing, U.S. Bankruptcy Judge James Peck gave the go-ahead to the $1.75 billion sale, which includes Lehman’s prime brokerage and its Manhattan headquarters. Three hedge fund creditors, led by Harbinger Capital Partners, had argued that the proceedings were moving too quickly, and that Lehman had failed to disclose cash transfers it made before filing for bankruptcy last Monday.

Judge Peck acknowledged that the circumstances were unusual. But he rejected the bids to block the sale, ruling that Lehman had nowhere else to turn.

“This is Friday; the case was filed on Monday,” Peck said at the hearing, which ended at 12:41 a.m. “What we’re doing is unheard of.”

“I need to approve this transaction because it’s the only available transaction,” he decided.

Harbinger had alleged a $5 billion cash transfer from Lehman’s London office occurred just prior to the bankruptcy filing, while Bay Harbour Management and Amber Capital alleged an $8 billion transfer. All three funds wanted the sale blocked until Lehman disclosed exactly what transfers were made.

RELATED STORIES

Barclays To Buy Lehman Prime Brokerage


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

Versum Materials (VSM), with a market capitalization of $2.7 billion, enables chipmakers to achieve higher performance at lower cost with enhanced reliability. Versum is a leading global provider of electronic materials for the integrated circuit and flat-panel display markets.