US, UK hedge funds try to spike-strip Lehman sale

We’ve learned a few things about jolly old Lord Falconer of Thoroton over the past week: a) He’s a real person (we’d previously assumed he was some obscure J.K. Rowling creation) who likes to don fake hair; b) He represents a strikingly accurate composite of Karl Rove and Jeff Garlin; and c) He’s first in line for the additional title of Damn Good Prognosticator.

A week ago today, the former Lord Chancellor—who’s now a consultant for Gibson, Dunn & Crutcher—predicted that the collapse of Lehman Brothers would prompt a wave of “mega litigation.”  Two days thereafter, scads of BigLawyers gathered to witness the latest developments of the nation’s largest-ever bankruptcy case, reportedly bumping Chelsea Clinton into the SRO section of Manhattan’s Alexander Hamilton Custom House, and by Monday, hedge funds on both sides of the Atlantic had filed legal challenges to the court-approved sale of Lehman’s North American holdings to Barclays.

Bay Harbour Management L.C., a Manhattan firm that’s “focused on investing in and around markets for distressed securities,” appealed the sale on Monday in the U.S. Bankruptcy Court of the Southern District of New York—scene of the aforementioned Friday night scrum.  While Bay Harbour didn’t disclose grounds for the Monday filing, the company, along with fellow hedge fund Amber Capital, accused Lehman’s last week of improperly shifting some $8 billion in European assets to the company’s headquarters in New York just before the bankruptcy filing.  London-based hedge fund GLG Partners, meanwhile, has also joined the fray, filing in the same New York court in an attempt to recover Lehman funds it claims it’s owed as a creditor, while another London institution, RAB Capital, has sued to recover some $50 million of assets held in limbo as Lehman administrators sift through the wreckage; London law firm Simmons & Simmons is leading RAB into battle, LegalWeek reports.

- posted by ben fuchs