By Jonathan Stempel
Dec 31 (Reuters) - Canadian Imperial Bank of Commerce has
agreed to pay $149.5 million to the estate of Lehman Brothers
Holdings Inc to resolve litigation over a collateralized debt
obligation tied to the bankruptcy of the former Wall Street
The settlement announced Monday resolves litigation that
began on Sept. 14, 2010, when Lehman sued CIBC and dozens of
others to recover more than $3 billion it said it had been
deprived of due to its Chapter 11 filing two years earlier.
Lehman sought to hold CIBC responsible for much of the more
than $1.3 billion due under an agreement requiring the Canadian
bank to cover payment shortfalls tied to a large CDO
In addition, Lehman contended its contracts gave it senior
payment priority, but that the bankruptcy caused it to be
improperly replaced with junior payment priority.
CIBC, Canada's fifth largest bank, recognized a gain of $841
million following Lehman's bankruptcy on Sept. 15, 2008, when it
had reduced to zero its financial commitment related to a note
issued by the CDO.
It has said in regulatory filings that Lehman was the
guarantor of a related credit default swap agreement. Monday's
payment amounts to $110.3 million after taxes, CIBC said.
Lehman spokeswoman Kimberly Macleod declined to comment.
Once Wall Street's fourth largest investment bank, Lehman
emerged from bankruptcy protection on March 6 and has paid out
roughly half of the estimated $65 billion it hopes to return to
creditors. Its bankruptcy is the largest in U.S. history.
The case is Lehman Brothers Special Financing Inc v. Bank of
America NA et al, U.S. Bankruptcy Court, Southern District of
New York, No. 10-ap-03547. The main bankruptcy case is In re:
Lehman Brothers Holdings Inc in the same court, No. 08-13555.
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