FirstBank Puerto Rico v. Barclays Capital Inc. (In re Lehman Bros.)
This appeal arises from the insolvency proceedings of Lehman Brothers Holdings Inc. FirstBank Puerto Rico challenged the sale of bonds it had posted as collateral to a Lehman entity for derivative transactions, which were subsequently sold to Barclays Capital Inc. The District Court affirmed the United States Bankruptcy Court for the Southern District of New York's judgment, which granted summary judgment to Barclays. The court held that FirstBank lost its property interest in the bonds when Lehman Swaps rehypothecated them to Lehman Brokerage, and therefore, FirstBank had no right to reclaim them from Barclays, who purchased them in a bankruptcy sale. The court also affirmed the sanctions against FirstBank for violating the Bankruptcy Court’s anti-suit injunction.