BAC criticizes $500m Lehman order

5 July 2011

Bank of America Corp (BAC) has criticized the decision of a judge to order the organisation to return $500 million in deposits to the bankrupt Lehman Brothers Holdings.

BAC stated that the judgement - which also saw the organisation having to pay interest - was an error, as the ruling should have gone in its favour, Bloomberg reports.

James Peck, US bankruptcy judge, settled the case after finding that the lender took deposits from Lehman's during the financial downturn of 2008 to offset against derivative obligations that were unrelated to those at hand.

Interest was set at nine per cent from November 2008 to December 2010 - but BAC, which has been in operation for more than 200 years, has challenged the decision, claiming Judge Peck ignored a "controlling New York statute" when covenants in the agreement that enabled the bank to take the deposits were disregarded.

"The bank exercised its lawful right. The bankruptcy court imposed an unlawful waiver of rights," BAC claimed.

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development