Lehman sues Citibank to recover over US$1.3bil

NEW YORK: The trustee overseeing the liquidation of Lehman Brothers Holdings' broker-dealer has sued Citibank to recover more than US$1.3bil in cash and other assets.

The assets include a US$1bil deposit that Citibank demanded to continue providing foreign exchange settlement services to broker-dealer Lehman Brothers Inc (LBI) after its parent filed for Chapter 11 bankruptcy protection, according to a complaint filed in US bankruptcy court in Manhattan on Friday.

Citibank also froze more than US$300mil in additional deposits, according to the complaint filed by Lehman trustee James Giddens.

When Lehman requested the return of the US$1bil deposit, Citibank said it had set the deposit off against other obligations Lehman owed to Citibank, according to the lawsuit.

The case centres on negotiations held during the frantic week of Lehman's bankruptcy filing on Sept 15, 2008, the largest ever, and its scramble to keep LBI functioning through the ensuing financial crisis. - Reuters