Creditors of Lehman Bros. have asked a judge to allow an investigation into whether JPMorgan Chase & Co. had a role in weakening Lehman as it headed toward bankruptcy. Get Quote
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The committee filed the request in court documents late Thursday.
The creditors committee believes Lehman Bros. Holdings Inc. had more than $17 billion in cash and securities held at JPMorgan before its Chapter 11 filing but that JPMorgan froze the assets Sept. 12, three days before Lehman filed for court protection. Its case is the biggest in U.S. history.
"The creditor's committee believes that as a result of JPMC's actions, LBHI suffered an immediate liquidity crisis that could have been averted by any number of events, none of which transpired," lawyers for creditors wrote in court papers.
"In freezing LBHI's assets, JPMC was purportedly holding all of LBHI's assets as a potential offset against any claims," lawyers said. JPMorgan provided billions in clearing advances - short-term loans investment banks use to clear trades on a daily basis - to Lehman in the days around its Chapter 11 filing.
Lehman disclosed last week that JPMorgan is its biggest creditor, holding secured claims worth an estimated $23 billion.
A spokesman for JPMorgan Chase declined to comment on Friday. U.S. Bankruptcy Judge James Peck is scheduled to consider the creditors' request on Oct. 16.
Separately, the government's pension insurance agency objected to Lehman's sale of its North American investment banking and trading operations to Barclays Capital, a deal that closed Sept. 22.
Lawyers for the Pension Benefit Guaranty Corp. argued that Lehman has not said whether it would use any of the proceeds from the sale to shore up its pension plan, which covers 25,000 former and current employees.
If the plan were to be terminated today, Lehman would need to add $72.5 million to make the plan whole.
Also, a slew of vendors filed objections to Lehman's cancellation or transfer of contracts. Objectors included Cisco Systems Inc., Sun Microsystems Inc. and others.
Lehman Bros. entered bankruptcy protection on Sept. 15 with assets of $639 billion and debt of $613 billion.
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