CIBC to pay $149.5 million to Lehman estate, ending dispute

(Reuters) - Canadian Imperial Bank of Commerce said it would 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 bank.

In a statement on Monday, Canada's fifth-largest bank said the million payment was equal to $110.3 million after taxes.

CIBC said it had previously recognized a gain of $841 million following Lehman's September 15, 2008, bankruptcy, when it had reduced to zero its financial commitment related to a note issued by the CDO.

On September 14, 2010, Lehman had sued CIBC and dozens of other defendants to recover more than $3 billion that it said it had been deprived of as a result of the Chapter 11 filing.

Lehman contended it had contracts that gave it senior payment priority on various derivatives and collateralized debt obligations, but that the bankruptcy caused this to be improperly replaced with junior payment priority.

It sought to hold CIBC responsible for a large portion of the more than $1.3 billion due under an agreement requiring it to cover payment shortfalls tied to a CDO transaction.

A Lehman spokeswoman had no immediate comment on the CIBC settlement.

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 by far 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 is In re: Lehman Brothers Holdings Inc in the same court, No. 08-13555.

(Reporting by Jonathan Stempel in New York; Editing by Lisa Von Ahn)

Source: http://news.yahoo.com/cibc-pay-149-5-million-lehman-estate-ending-143949747--sector.html

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