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Way, way back in April, Manhattan federal bankruptcy court judge James Peck predicted that the Lehman Brothers estate’s $13 billion fraud suit against Barclays would be “ a long slog.” Boy was he right. The trial over Lehman’s claims that Barclays orchestrated a secret windfall for itself when it acquired Lehman’s broker-dealer business in September 2008 went on, and on, and on, and on, until closing arguments finally wrapped up late last month. But at last, the slog is over. On Monday the Lehman estate’s lawyers at Jones Day and Barclays’ lawyers at Boies, Schiller & Flexner submitted their final post-trial briefs in the adversary proceeding. And as always in this case, there’s plenty in the papers to chew over. (How much? Lead Lehman lawyer Robert Gaffey of Jones Day notes that his brief incorporates by reference many of the estate’s previous arguments, but it still runs 432 pages. Barclays’s brief is longer still, at a combined 614 pages. Yep: 614) The central allegations in Lehman’s brief echo what the estate argued at trial: Barclays executives conspired with a few Lehman insiders to ensure a multibillion dollar windfall for Barclays when it purchased Lehman’s North American operations for about $2 billion in the days immediately following Lehman’s Sept. 15, 2008, Chapter 11 filing. Lehman asserts that Barclays tricked Judge Peck, who signed off on the deal believing it was “balanced,” and who was not adequately informed of late-developing changes in the deal that were disclosed only in a clarification letter prepared by Barclays as the transaction neared a close. But the clarification letter wasn’t the extent of Barclays’ deception, according to Lehman’s brief. “As the evidence at trial showed, misrepresentations and failures to disclose did not just arise at the end of the deal with the clarification letter,” the brief argues. “The sale transaction that was disclosed to the court was based upon false premises from the very outset….In the end, the transaction that closed on September 22, 2008 was not the deal that had been described to the court.” Lehman’s brief asserts evidence from the trial proved Barclays misled Judge Peck about the substance of the sale. It also attacks Barclays for arguing that the deal would have been approved regardless of the alleged disclosure failures. “This notion would turn the court into a rubber stamp, rendering the sale hearing a meaningless exercise and forcing the court to ignore material misrepresentations made to it,” Lehman’s Jones Day lawyers argue. Their brief asks Judge Peck to vacate his order approving the sale and to award the estate $13 billion, “reflecting the value of the assets improperly transferred to Barclays over and above that disclosed to and approved by the court,” as well as all fees and costs. Barclays’ 164-page memorandum of law, 285-page proposed findings of fact, and 124-page proposed conclusions of law not only outweigh Lehman’s brief, but their author, Jonathan Schiller of Boies Schiller, definitely matches his Jones Day adversaries when it comes to expressing outrage. “Movants make allegations of a ‘secret discount,’ of estimated asset values that were ‘understated,’ of estimated liability values that were ‘overstated,’ and of a transaction that was described to the court as a ‘wash’ but in fact was secretly designed to be a transfer of net value from the Lehman estates to Barclays,” he writes. “In each case, the evidence showed that [Lehman's] claims are either based upon a gross distortion of the facts, or are directly contradicted by the facts.” Barclays asserts that evidence and testimony from the lengthy bench trial showed that the Lehman negotiators and their advisers from Weil, Gotshal & Manges and Lazard were fully aware of Lehman executives’ discussions with Barclays about the value of the broker-dealer’s assets. To argue otherwise long after the fact, the brief asserts, ignores the reality of a complex deal transacted under the most difficult, pressurized circumstances imaginable. “The trial proved that everyone involved acted in good faith; that the sale was indeed better than a liquidation for the estates, the creditors, the employees, the customers, the financial markets, and the public; that the sale was the best and only viable option available at the time; and that the court was correct to approve it,” the Barclays brief states. Lehman’s unsecured creditors’ committee, represented by James Tecce of Quinn Emanuel Urquhart & Sullivan, filed its own 183-page memorandum and separate 34-page proposed findings Monday, supporting the Lehman estate’s claims and urging Judge Peck to vacate his September 2008 approval order. Given the voluminous submissions (the Securities and Exchange Commission also filed a 17-page post-trial brief Monday), Judge Peck may want to make this Thanksgiving a working holiday. Jones Day’s Gaffey didn’t respond to an e-mail asking when he expected Judge Peck to rule in the case. We’ve reported that Barclays and its lawyers at Boies Schiller put on a pretty strong defense at trial, and Schiller told us Monday that he is looking forward to a ruling within the next three months. “I think we made a very strong record, and I look forward to the court’s synthesis of the materials,” he said.

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