Citigroup has reached a $360m agreement to settle more than $1bn collateral dispute with, James Giddens, the trustee for the liquidation of Lehman Brothers’ US brokerage estate unit.
As part of the agreement, which is subject to court approval, around $75m claimed by the bank will also be waived. The amount was paid to the estate as a contingent during the early stage of the liquidation, according to court documents.
In early 2011, a claim against Citigroup and its subsidiaries was filed by Giddens accusing that $1bn was forcibly obtained and wassupposed to be divided between creditors as part of a general asset pool.
Meanwhile, Citigroup responded that the amount was part of the Bankruptcy Code’s "safe harbor" provisions and cannot be included in the creditors’ asset pool.
Giddens was quoted by Reuters as saying, "For the benefit of customers and other creditors, we continue to resolve disputes and marshal assets for the estate, and this agreement accomplishes both."
Following emergence from bankruptcy, Lehman is likely to pay out $33bn of an expected $65bn to creditors.
The bankrupt company had recently said that it had settled over $38bn of asset claims litigation.