(Reuters) JPMorgan Chase & Co can be asking to go on to government the courtroom a personal injury through Lehman Brothers Holdings Inc accusing them with siphoning $8.6 billion from Lehman's house from the days leading up to its record bankruptcy.
In court papers filed past due Monday, JPMorgan explained that case, sent in with U.S. Bankruptcy Court , need to be went to national judge in light connected with the actual U.S. Supreme Court's contentious June ruling inside previous Playboy model Anna Nicole Smith's monetary gift battle.
The case, Stern v. Marshall, pitted the delayed Smith from the home regarding the woman dearly departed an old husband J. Howard Marshall. The court reigned over in opposition to Smith's estate, indicating bankruptcy courts don't have any authority to decide boasts added by way of a chapter 13 taxpayer in arrears alongside a creditor, unless the cases tend to be entirely rooted within a bankruptcy proceeding law.
JPMorgan mentioned in the courtroom paperwork Monday that Lehman's 49-count issue goes "above along with beyond" chapter 7 law, including accusations connected with fraud, coercion and also breach associated with contract.
Lehman defended that bankruptcy court 's jurisdiction, telling in a very Monday court submitting which the lawsuit's allegations carry a a bankruptcy proceeding context simply because they problem JPMorgan's first proofs associated with declare alongside Lehman.
The suit, submitted with May 2010, accuses JPMorgan regarding illegally siphoning related to $8.6 million connected with desperately-needed property inside the days to weeks prior to Lehman's bankruptcy.
Lehman stated JPMorgan, its main eradicating bank, utilized "unparalleled access" towards the facts of it has the fiscal hardship for you to extract this collateral, hastening its $639 thousand bankruptcy, which often continues this major previously and also had been an important catalyst with the monetary crisis.
JPMorgan countersued in December, telling Lehman caught it having greater than $25 billion throughout noxious financial loans put on under no circumstances always be repaid.
A spokeswoman and attorney for Lehman could not interact to requests for brief review Monday. An attorney and spokeswoman for JPMorgan were furthermore not really quickly available Monday night.
The scope in the Supreme Court's ruling in the Smith instance possesses engendered stress among chapter 13 judges, a number to whom have expressed uncertainness in respect of no matter if your judgment may possibly stunt their particular authority.
Judge Robert Drain, of U.S. Bankruptcy Court within Manhattan, said at the American Bankruptcy Institute's Views in the Bench seminar prior this four week period that this lording it over leads to bankruptcy hearing judges to be able to "doubt their cause for being."
Judge James Peck, whom oversees Lehman's argument using JPMorgan, mentioned at the actual discussion this he believes the ruling will in the long run possess "relatively limited" application in that day-to-day part of a chapter 7 judge.
But Peck additional how the ruling has been "weaponized . on this concept this that that is certainly not necessarily nailed straight down obtains identified up."
"This is usually an argument that is thrown from me around settings of which I am self-confident this (Supreme Court Chief) Justice (John) Roberts under no circumstances contemplated in addition to would be horrified whenever he suspected about," Peck said on the conference.
Lehman's event towards JPMorgan is slated to get demo throughout 2012.
The circumstance is definitely Lehman Brothers Holdings Inc. v. JPMorgan Chase Bank NA, U.S. Bankruptcy Court, Southern District connected with New York, No. 10-ap-03266. The major bankruptcy circumstance can be In re: Lehman Brothers Holdings Inc inside the very same court, no. 08-13555.
(Reporting simply by Nick Brown, editing through Bernard Orr)
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