03:19 ET<\/span>
\n<\/span><\/p>\nBarclays’ takeover of much of Lehman Brothers’ US operations in 2008 was flawed but fair, a judge in New York has ruled.<\/p>\n
Lehman had sued Barclays for $11bn (\u00a36.8bn) in damages, claiming the bank was given special treatment. <\/p>\n
However, while the judge said the sale process was “imperfect”, it was still “adequate” under the circumstances.<\/p>\n
Barclays bought Lehman’s US operations in a hastily-arranged sale at the peak of the credit crisis in September 2008.<\/p>\n
Averting ‘calamity’<\/span><\/p>\nLehman agreed to sell its US investment banking and broking arm for $1.85bn five days after it filed for Chapter 11 bankruptcy protection. <\/p>\n
That, and the fact Lehman was the highest profile bank to be allowed to fail, was one of the most significant events of the global crisis.<\/p>\n
Lehman’s bankruptcy estate had hoped to extract an $11bn “windfall” payment from Barclays.<\/p>\n
However, US Bankruptcy Judge James Peck said in his opinion statement that while the deal had not been without flaws, it was sound overall.<\/p>\n
“The sale process may have been imperfect, but it was still adequate under the exceptional circumstances of Lehman Week,” he said.<\/p>\n
The deal was seen by many as vital for keeping the international banking system alive.<\/p>\n
Judge Peck there was an “undeniably correct” perception at the time that the sale “mitigated systemic risk,” and helped avert “an even greater economic calamity”.<\/p>\n
He said there was no better alternative to the sale, which avoided “a potentially disastrous piecemeal liquidation” and saved thousands of jobs in the financial services industry.<\/p>\n
A spokesman for Barclays said the UK bank was pleased that the court had found that Barclays had acted in good faith.<\/p>\n
Lehman, which has sued other banks including Bank of America and JP Morgan Chase to recover assets for creditors, gave no immediate comment.<\/p>\n
Earlier this month, Barclays reported pre-tax profits of \u00a36.07bn for 2010, up almost a third on the \u00a34.59bn profit the bank made in 2009.<\/p>\n<\/p><\/div>\n<\/p>\n
See the rest here:
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