Lehman's $70M Collateral Suit Against BoNY Survives

By Pete Brush (August 11, 2009, 5:34 PM EDT) -- A bankruptcy judge on Tuesday declined to dismiss Lehman Brothers Special Financing Inc's. adversary lawsuit against an English affiliate of Bank of New York Mellon in which the fallen financial giant claims it should get a priority claim to $70 million in collateral securing a swap deal despite its bankruptcy.

The case, in the U.S. Bankruptcy Court for the Southern District of New York, is proceeding contemporaneously with a similar fight in England, where the English High Court of Justice's Chancery Division made a decision against Lehman late last month.

The U.S. lawsuit, filed in May, claims the debtor's right to...

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