Firm Files Suit Against Trust and U.S. Bank, as Trustee, Concerning Improper Termination of Lehman Swap
September 18, 2015
The Firm filed suit on behalf of Lehman Brothers Special Financing Inc. (“LBSF”) against a trust and U.S. Bank Trust National Association, as trustee of the trust, related to U.S. Bank’s improper and ineffective termination of a $25 million interest rate swap between LBSF and the trust in September 2008 after the Lehman Brothers bankruptcy. As alleged in the Complaint, the trustee was not entitled to terminate the swap and also failed to designate an early termination date or calculate an appropriate termination payment. As a result, the trustee’s purported termination of the swap was ineffective and the swap remains live. As further alleged in the Complaint, LBSF is therefore owed fixed-rate interest rate payments under the swap that have not been paid ever since the swap was purportedly terminated in 2008. In addition, even assuming the swap was properly terminated, LBSF was heavily “in the money” in the swap at the time of the purported termination, entitling LBSF to a multi-million dollar termination payment that the trust never calculated, let alone paid to LBSF.
The case was filed in the Southern District of New York Bankruptcy Court and is entitled Lehman Brothers Special Financing Inc. v. Corporate-Backed Trust Certificates, Goldman Sachs Capital I Securities-Backed Series 2004-6 Trust and U.S. Bank Trust National Association, Adv. Pro. No. 15-01334 (SCC). A copy of the Complaint is available here.
A copy of a recent industry publication reporting on the lawsuit filing is available here.