Lehman sues Citigroup to recoup $2.5 billion transfers

Lehman Brothers Holdings Inc has sued Citigroup Inc to recover $2.5 billion transferred in the months leading up to Lehman's historic collapse, saying Citigroup is wrongfully keeping the money at the expense of other creditors In a complaint filed late Wednesday in the US Bankruptcy Court in Manhattan, Lehman said Citigroup demanded the money as economic conditions worsened in 2008, largely to protect itself in case of problems in Lehman's trading accounts
But when Lehman filed its record-breaking $639 billion bankruptcy on September 15 of that year, Citigroup wrongfully kept the money, claiming it could use it to offset nearly $2 billion in other claims Lehman said those claims are rooted in swap agreements between the companies, and are "inflated" by more than $1 billion. It said Citigroup acted in a wrongful attempt to ensure that it got paid ahead of other creditors.
The 21-count complaint seeks a return of the money and a reduction or disallowance of claims by Citigroup, the third-largest US bank by assets. Citigroup rejected Lehman's allegations, saying it demanded the cash deposits to protect shareholders from any losses in case of Lehman's demise, which it did not want to occur.