Jan. 3 (Bloomberg) -- JPMorgan Chase & Co., fighting Lehman Brothers Holdings Inc. over billions of dollars in claims and damages, may know soon whether its bid to dismiss the defunct firm's $8.6 billion lawsuit will succeed, a district judge said.
U.S. District Judge Richard Sullivan in New York said he is “working on” a decision on whether Lehman's suit against the biggest U.S. bank belongs in district court, according to court papers. However, a bankruptcy judge may be ready to rule soon on JPMorgan's move to dismiss the case, and should do so first, Sullivan told both sides, according to a transcript of a Dec. 30 court session.
“I don't want to be in a situation where the bankruptcy court is just doing nothing because they're waiting for me to rule,” Sullivan said. “They got this thing all teed up, maybe just ready to press a button on it.”
Lehman's suit alleges the New York-based lender helped cause its 2008 collapse by demanding $8.6 billion in collateral. JPMorgan has argued that the case needs a district judge because it raises legal issues beyond the jurisdiction of a bankruptcy judge, who can't rule on matters including Lehman's allegation that JPMorgan caused monetary damage to failing Lehman in 2008. Lehman says the suit confines itself to bankruptcy matters.
‘Significantly Overstated'
Separately, JPMorgan is defending $6 billion in claims that Lehman says are “significantly overstated.”
Lehman filed the biggest bankruptcy in U.S. history in September 2008, listing $613 billion in debt.
JPMorgan, which lent $70 billion to Lehman's brokerage around the time of the bankruptcy, sued Lehman back after the $8.6 billion suit, alleging Lehman defrauded its lender into making the loan.
The main case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The lawsuit is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, 10-03266, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The district case is Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank, 11- cv-6760, U.S. District Court, Southern District of New York (Manhattan).
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