Firm Obtains Court Ruling Denying Jurisdictional Challenge to Lehman’s Indemnification Claims

On August 13, 2018, Bankruptcy Judge Shelly C. Chapman denied defendants’ omnibus motion to dismiss indemnification claims brought by the Firm’s client, Lehman Brothers Holdings Inc. (“Lehman”), for lack of bankruptcy subject matter jurisdiction and for improper venue.

The Firm represents Lehman in seeking to obtain contractual indemnification from more than 100 defendants that sold defective mortgage loans to Lehman’s affiliate, and that Lehman subsequently sold to The Federal National Mortgage Association (“Fannie Mae”) or The Federal Home Loan Mortgage Corporation (“Freddie Mac”). In early 2014, the Bankruptcy Court approved Lehman’s multi-billion dollar settlements with Fannie Mae and Freddie Mac concerning defective loans that Lehman sold to Fannie Mae and Freddie Mac. In 2016, Lehman filed an omnibus adversary proceeding against more than 100 mortgage loan sellers, seeking contractual indemnification for the amounts Lehman paid to Fannie Mae and Freddie Mac based upon the defective loans that defendants sold to Lehman’s affiliate. Many of the defendant mortgage loan sellers filed a motion challenging the bankruptcy court’s jurisdiction over Lehman’s indemnification claims and the adversary proceedings, and disputing that venue for the proceedings was appropriate in the bankruptcy court.

On August 13, 2018, the Bankruptcy Court denied the defendants’ motion to dismiss and held that it had subject matter jurisdiction over Lehman’s indemnification claims and the adversary proceedings. The Bankruptcy Court also denied the defendants’ motion to dismiss on the basis of improper venue.

A copy of the Court’s decision is available here.