Lehman counterparty hold-outs warned to pay up on credit derivatives contracts
Counterparties may find that the legal process is stacked against them if they continue to resist payment of outstanding derivatives contracts with the bankrupt Lehman Brothers, say lawyers
Counterparties to derivatives trades with Lehman Brothers that are currently in-the-money for the bankrupt estate will not be able to hold off payment indefinitely, predict lawyers.Since Lehman's bankruptcy on September 15, 2008, many of its derivatives counterparties have apparently sought to withhold payment under section 2(a)(iii) of the International Swaps and Derivatives Association master agreement.
The relevant section of the master agreement, known as the 'flawed asset' clause, dictates
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