UK High Court OKs Flip Clauses In Lehman Notes

Law360, New York (July 27, 2011, 2:13 PM EDT) -- The U.K.'s highest court ruled Wednesday that a Lehman Brothers Holdings Inc. affiliate couldn't get its hands on $100 million from noteholders because a so-called flip clause that gave noteholders priority when Lehman went belly-up wasn't designed to skirt bankruptcy laws.

The dispute centers around complex synthetic swap and collateralized debt obligation transactions between Lehman, the noteholders and special purpose vehicles set up as part of the deal. The transaction contained special clauses that "flipped" the payment priority on underlying collateral to noteholders in the event...
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