Lehman UK files $8-billion recovery suit against US parent
22 September 2008
Failed US investment bank Lehman's European administrators, PricewaterhouseCoopers has filed an 83-page motion in the New York court demanding that $8 billion that Lehman Europe sent to the US be returned to London as it needed to pay salaries to 4,500 employee, property bills, creditors and other day-to-day expenses.
Lehman's 4,500 employees in the UK were rendered jobless after the company had been put into administration when it sought the US Chapter 11 bankruptcy protection. It had become the biggest corporate failure in history.
PricewaterhouseCoopers has questioned why $8 billion was transferred to New York from London just before the bank collapsed.
In the days leading up to Lehman's collapse, the US business took back all the cash held at its overseas subsidiaries. $8.2 billion held by Lehman's offices overseas was sent through London to its headquarters in the US via electronic transfer. (See: Lehman's NY staff to get $2.5 billion bonus; London staff scandalised)
Lehman's European headquarters which is based in London often remitted money from its London HQ to its parent company in New York where the money kept overnight accrued interest and sent back the following morning to London.
On Sunday when Lehman filed for bankruptcy, Lehman Europe found that it was down by $8 billion as the money failed to arrive leaving the employees and creditors high and dry.