Judge OKs Lehman-Barclays deal
Written on September 19, 2008
A bankruptcy judge on Wednesday gave Lehman Brothers initial approval to sell key North American businesses to Barclays for $1.7 billion in cash.
The approval came just two days after Lehman Brothers Holdings Inc. (LEH, Fortune 500) filed the biggest bankruptcy in U.S. history.
The judge’s approval sets in motion the asset sales but leaves open the possibility of a competing bid. Lehman plans to seek final court approval Friday.
British bank Barclays (BCS) said Tuesday that it would buy Lehman’s investment banking and capital markets businesses for $250 million in cash, as well as Lehman’s New York headquarters and two data centers in New Jersey for an additional $1.5 billion.
Lawyers for creditors and bondholders objected to the speed of the process, saying two days was not enough time to evaluate the deal much less put together a competing bid.
But Judge James Peck declined to delay the approval of the bidding process and said, "There is effectively one logical purchaser for these assets."
"That purchaser has already identified itself, has been identified publicly to the markets, has been identified publicly to the employees and represents the continuity for this operation," he said payday loan online.
Lawyers for the Federal Reserve Bank of New York, the Securities and Exchange Commission and JPMorgan - which believes it could be the company’s biggest creditor - supported the sale effort.
The judge also approved Lehman Brothers’ request for a $100 million breakup fee plus $25 million in expenses to be paid to Barclays if the deal fails and a competitor wins out.