By Emily Chasan
NEW YORK (Reuters) - A U.S. bankruptcy judge approved a settlement calling for $1.27 billion in cash plus securities with a face value of $5.7 billion to be transferred to BARCLAYS (BARC.LO)Plc
The settlement relates to fund transfers made the week of September 15 to keep Lehman's
U.S. Bankruptcy Judge James Peck approved the settlement on Monday and said the Lehman creditors committee could conduct further inquiries into the agreement if it chose.
"This settlement represents a significant benefit to (Lehman Brothers) and is the right thing to do," Peck said, citing representations made by lawyers for JPMorgan Chase & Co
The securities being transferred, many of them mortgage-backed securities, have declined substantially from their original value, lawyers for the various parties said in court. They declined to give the current value of the securities.
According to court papers, the $7 billion in cash and securities stemmed from a sum Barclay's had expected to receive after loaning $45 billion to the Lehman brokerage business on September 18, two days before the court approved its purchase of the unit.
The broker-dealer needed the funds to guarantee its short-term obligations. It had been given assistance earlier that week from the New York Fed, which made a short-term loan worth $46.22 billion to Lehman.
Barclays had expected $49.7 billion to be returned to it from Lehman as part of its loan, but only $42.7 billion could be transferred before the court ordered the liquidation of Lehman's brokerage business.
The securities and cash will come from Lehman Brothers Inc accounts at JPMorgan Chase & Co
Harvey Miller, a lawyer representing bankrupt Lehman Brothers Holdings, told the court that the brokerage's former parent company did not object to the settlement and that it would spare the company significant future litigation.
(Reporting by Emily Chasan; editing by John Wallace)
