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MANILA, Philippines – State-run power privatization firm PSALM has enlisted a top UK law firm for its $3.4 million claim against bankrupt Lehman Brothers Special Financing, Inc.
In a statement on Wednesday, Febuary 1, Emmanuel Ledesma Jr., president and CEO of Power Sector Assets and Liabilities Management Corp. (PSALM), said they have engaged international law firm Pinsent Masons for P18.33 million ($424,840) for the case PSALM has filed against Lehman before a New York bankruptcy court.
The case stemmed from a $200 million hedging transaction PSALM entered into with Lehman in 2007. When Lehman filed for bankruptcy in 2008 as the global crisis was unfolding, PSALM terminated its transaction on November 3, 2008 and replaced it with a new deal that was structured to protect PSALM’s funds.
“The replacement ensures the continuous protection of PSALM’s transaction that it initially made with Lehman Brothers. The value of the Lehman swap that was replaced may now be sold in the derivatives market for up to approximately $12.85 million as of November 2011,” Ledesma said in a statement.
PSALM’s $3.4 million claim represents the cost of the replacement and other legal fees and damages that Ledesma said are allowed under the provisions of the new deal.
Lehman was once a financial giant but it was caught in an abyss when toxic mortgage assets grew too unsustainable, triggering a financial crisis.
Since Lehman filed for bankruptcy protection in New York in 2008, all creditors and other entities it owed have to course their claims through the New York court.
PSALM is a state-owned entity created to sell government-owned power plants as part of a plan to restructure the energy sector.
It engaged Pinsent on January 31 after a negotiated bid. Pinsent, one of the top 10 law firms in the UK, has handled various bankruptcy litigation cases in New York. – Rappler.com