Barclays bought the brokerage in the 2008 financial crisis after Lehman went bankrupt, as regulators urged approval of the deal to prevent a panic. The sale took a week. Barclays has said it was the sole bidder, taking 10,000 employees and giving 72,000 customers access to $40 billion in assets frozen in the September 2008 bankruptcy. Lehman’s lead bankruptcy lawyer, Harvey Miller of Weil Gotshal & Manges LLP, testified in April that the sale “was of enormous benefit to the nation.”
Lawyers for the Lehman estate claimed that Barclays had improperly reaped an $11 billion windfall from the deal by secretly negotiating a discount for Lehman’s North American operations.But Judge Peck disagreed, writing that the speed of Lehman’s bankruptcy filing and the urgent need to sell the failed firm’s assets overrode what he acknowledged were flaws in the sales process.
Barclays has argued that it was the only bidder for the Lehman business, and the failure to quickly gain approval of its offer would have led to the loss of thousands of jobs. The firm also argued that several of Lehman’s own advisers, including its chief lawyer, Harvey R. Miller of the law firm Weil, Gotshal & Manges, had supported the sale. However, US Bankruptcy Judge James Peck said in his opinion statement that while the deal had not been without flaws, it was sound overall. "The sale process may have been imperfect, but it was still adequate under the exceptional circumstances of Lehman Week," he said.
The deal was seen by many as vital for keeping the international banking system alive. Judge Peck there was an "undeniably correct" perception at the time that the sale "mitigated systemic risk," and helped avert "an even greater economic calamity". He said there was no better alternative to the sale, which avoided "a potentially disastrous piecemeal liquidation" and saved thousands of jobs in the financial services industry as reproted by BBC today