GLG Adds Voice To Criticism Of Lehman Transfers

Sep 23 2008 | 10:58am ET

Undeterred by the failure of three other hedge funds in a similar action, GLG Partners is seeking to block the sale of Lehman Brothers Holdings’ North American investment banking operations until it gets its money back.

Specifically, the London-based, New York-listed hedge fund has objected to the sale of Lehman’s U.S. broker-dealer assets to Barclays, as it tries to recover funds it is owed as a creditor of the bankrupt investment bank. GLG is demanding the return of the “full amount” of cash transferred from Lehman’s European subsidiary in an effort to shore up the parent firm’s liquidity prior to its bankruptcy filing on Monday. On Friday, a bankruptcy court judge in New York rejected the bids of Harbinger Capital Partners, Bay Harbour Management and Amber Capital to block the sale after they complained about the same transfer of funds.

GLG, which filed its motion in U.S. Bankruptcy Court on Friday, says it does not “in principle oppose the sale of Lehman’s broker-dealer assets held by Lehman Brothers Holdings to Barclays,” but said it feared the cash “may have been improperly taken” by Lehman’s U.S. headquarters. The hedge fund is supporting a motion filed by Lehman administrator PricewaterhouseCooopers designed to ensure that Lehman’s European subsidiary can recover the transferred funds.

Last week, GLG assured investors and clients in a press release that it transferred most of its assets from Lehman to other firms, and that “the residual exposure of the GLG Funds to Lehman will not be material.”

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