Lehman Brothers may be dead, but its earthly representatives are challenging the well-established legal precedent of "tap tap, no takebacks" in an effort to extract $10 billion from Barclays.
It seems the Barclays may have used some fancy contractual footwork to get more than Lehman bargained for when the British bank bought the dying bank's North American assets. Alvarez and Marsal, hired by Lehman to figure out how Barclays wound up shacking up with its wife in addition to running its U.S. businesses, say Barclays pulled a fast one, getting a judge to give the OK to amendments to the preliminary sale contract that opened billion-dollar loopholes.
Barclays says it did nothing wrong--look, a judge said it's OK. The Lehman lawyers say that the court that approved the preliminary contract had no idea that it was so badly written as to allow Barclays to get the house, the cars and the kids.
Whether or not dead firms can become Indian givers is a matter for the courts. But isn't there a "no takebacks" clause in the Constitution? Somewhere near the "possession is nine-tenths of the law" rule, which also applies here.
In any event, bravo to Barclays. Even if they have to give the money back, it was a pretty ballsy move.
Lehman seeks $10bn clawback in Barclays suit [FT]