Lehman Brothers Holdings Inc. and its creditors are suing several units
of Citigroup Inc. to recover $2.5 billion the failed investment bank
transferred to a backup account at Citi months before seeking bankruptcy
court protection.
In the complaint filed on Wednesday with the U.S. Bankruptcy Court for
the Southern District of New York, Lehman claims that Citibank is
wrongfully withholding the money as a potential source of funds in a
dispute over derivative contracts.
Lehman also is asking the court to disallow what it says are $2 billion
of "inflated and legally unsupported" claims that Citibank has asserted
against it.
In a statement Thursday, Citigroup vowed to defend itself and its right
to recover losses from Lehman's collapse. It called the lawsuit
unjustified and accused Lehman of trying to renege on its obligations
and claw back assets to which it has no right.
According to the lawsuit, Citi demanded on June 12, 2008, that Lehman
transfer between $3 billion to $5 billion into an account to cover
potential overdrafts by Lehman subsidiaries that were using Citi's
clearing and settlement services.
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