GLG Partners, a global hedge fund, has lodged a formal objection to the sale of Lehman Brothers’ US broker-dealer assets to commercial bank Barclays. By filing the complaint, the hedge fund hopes to help recover the $8 billion allegedly transferred to Lehman’s US holding company from its European division.
Accounting firm PricewaterhouseCoopers (PwC), the administrator for Lehman’s European arm, is also understood to be seeking the return of the $8 billion, which is alleged to have been transferred to Lehman Brothers Holdings Inc (LBHI) from Lehman Brothers International Europe (LBIE) a few days before LBHI filled for Chapter 11 bankruptcy protection.
“While GLG does not in principle oppose the sale of Lehman’s broker-dealer assets held by LBHI to Barclays, the motion was filed in support of that lodged by PwC to ensure that the rights of LBIE, its administrators and LBIE’s creditors to recover the full amount of cash that may have been improperly taken by LBHI from LBIE are fully preserved,” GLG said in a statement.
GLG filed its complaint with the United States Bankruptcy Court in the Southern District of New York.
The hedge fund has been in regular contact with its regulators and PwC to identify client segregated assets and agree a plan to settle pending transactions. PwC has released a timetable outlining the return of Lehman’s client assets, but has said this will take “a considerable amount of time.”
A statement from GLG last Tuesday said that the majority of its open positions with Lehman had been transferred to other prime brokers for settlement, with the remainder expected to be transferred shortly.
However, today’s statement read, “Although some progress was made last week with regard to outstanding options and futures positions, in light of the ongoing LBIE receivership and recent announcements by PricewaterhouseCoopers, GLG cannot predict when amounts exposed to LBIE will be released and when pending transactions will be settled.”