Judge approves Barclays Lehman deal

12 April 2012

A bankruptcy judge in New York has given Lehman Brothers initial approval to sell its key North American businesses to Barclays for £940m in cash.

The approval comes just two days after Lehman Brothers filed the biggest bankruptcy in US history.

The judge's approval sets in motion the asset sales but leaves open the possibility of a competing bid. Lehman plans to seek final court approval on Friday.

Barclays said it would buy Lehman's investment banking and capital markets businesses for £138.9m in cash, as well as Lehman's New York headquarters and two data centres in New Jersey for an additional £830m.

Lawyers for creditors and bondholders objected to the speed of the process, saying two days was not enough time to evaluate the deal, much less put together a competing bid.

But Judge James Peck refused to delay the approval of the bidding process and said: "There is effectively one logical purchaser for these assets.

"That purchaser has already identified itself, has been identified publicly to the markets, has been identified publicly to the employees and represents the continuity for this operation."

Lawyers for the Federal Reserve Bank of New York, the Securities and Exchange Commission and JPMorgan -- which believes it could be the company's biggest creditor -- backed the sale effort.

The judge also approved Lehman Brothers' request for a £55.6m break-up fee plus £13.9m in expenses to be paid to Barclays if the deal failed and a competitor won out.

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