Lehman sues Giants Stadium over swap contracts gone sour

Reuters

Oct 24 (Reuters) - Lehman Brothers Holdings Inc is suingGiants Stadium LLC, home of football club New York Giants, torecover more than $100 million over canceled interest-rate swapcontracts that were used to hedge bonds issued to build thearena, according to a court filing.

The case goes back to 2008, when Lehman's historic collapseserved as a key catalyst to the global financial crisis.

Giants Stadium, now known as MetLife Stadium, is owned bythe Mara and Tisch families - who also own the New York Giantsfootball club. The New York Giants and the New York Jets playtheir home games at the stadium.

The lawsuit came about as Lehman and Giants Stadium couldnot agree on the settlement amount of two swap contracts afterthe investment bank filed for bankruptcy.

The swap contracts, mostly underwritten by Lehman Brothers,were intended to hedge interest rate risks on about $650 millionin bonds issued by the Giants entity.

When the swaps were terminated in September 2008, at a timeLehman filed for bankruptcy, Giants Stadium "undertook acontorted plan" to avoid paying millions of dollars, theinvestment bank said in a lawsuit on Wednesday.

Giants Stadium estimated that Lehman owed it about $301million after the termination of the swaps contracts, a figuredisputed by Lehman, the filing said.

Later, Boston-based Baupost Group LLC, one of the world'sbiggest hedge funds, bought the Giants Stadium claims againstthe Lehman estate and in turn sought to amend its claims toabout $585 million for each contract, the lawsuit said.

Lehman said the swaps were about $60 million in its favorjust days before it filed for Chapter 11.

On Wednesday, Lehman sought damages of no less than $94million plus interest, after what is says was the "propercalculation" of the settlement amount of the swaps.

Giants Stadium LLC has an ownership interest in 50 percentof the MetLife stadium, while the other half of the stadium isheld by the owners of New York Jets LLC.

Lehman emerged from bankruptcy last year with a liquidationplan slated to repay creditors about $65 billion, or an averageof about 21 cents on the dollar for allowed claims. The windingdown is expected to take a few years.

The case is Lehman Brothers Holdings vs Giants Stadium LLC,Case No. 13-01554, U.S. Bankruptcy Court, Southern District ofNew York.

View Comments (2)