BANKRUPT INVESTMENT BANK Lehman Brothers has sued Intel over a $1bn derivatives deal dating back to 2008.
Lehman Brothers imploded spectacularly on 15 September 2008 after reaping what it and other investment banks had sown over the prior decade. Now the firm is trying to reclaim some cash from a deal done with Intel just before it went belly up that ended with the chipmaker taking $1bn from the investment bank.
Lehman Brothers' OTC derivatives unit did a deal with Intel just days before Lehman Brothers filed for bankruptcy in which Intel gave it $1bn in exchange for 50,552,943 Intel shares that would be delivered on 29 September 2008. Intel, like any firm making such a deal, took $1bn in collateral from Lehman Brothers in case the deal went south, which it did when Lehman Brothers filed for bankruptcy just days later.
So Intel claimed its $1bn from Lehman Brothers, an amount that the investment bank is now disputing by saying that the 50,552,943 Intel shares were worth $873m on 29 September 2008, the agreed delivery date. Lehman is arguing the deal with Intel was to deliver 50,552,943 shares at market value rather than $1bn.
Lehman claims that Intel took the $1bn in collateral after terminating the agreement two weeks after it went bankrupt. While Lehman Brothers' actions might sound questionable, given the notion that collateral is to protect both sides if one is unable to honour a contract, Lehman's legal and account teams have a duty to try to recover as much cash as they can for the firm's creditors.
The investment bank didn't say how much it wants to recover from Intel, with the amount to be decided at trial. µ