Lehman goes to court to recoup US$2b from old derivatives partner Citigroup

New York

ALMOST a decade after the global financial crisis, the fate of another US$2 billion from the wreckage of Lehman Brothers Holdings Inc is about to be determined.

The failed New York investment bank is seeking to recoup the cash from one of its old derivatives trading partners, Citigroup Inc. In a trial that started last week in Manhattan bankruptcy court, Lehman alleged that Citigroup created "phantom transaction costs" in order to justify a bankruptcy claim that would allow it to keep US$2 billion in cash that Lehman had deposited on the trades. Citigroup contended that it did nothing wrong and used reasonable practices.