Courts call for Lehman derivative contract settlement in US
Investors still holding Lehman Brothers derivative contracts have been called to terminate their positions by US bankruptcy courts. The bank was estimated to have entered into 930,000 contracts including swaps, options and forwards, of which 733,000 have already been terminated voluntarily.
The aim of the motion is stated to 'promote efficiency and maximise value for the Debtors' estates.' Bankruptcy proceedings include a 'safe harbour' provision which allows holders of derivative contracts to terminate them if the issuer has filed a chapter 11 case. However, some holders have still not unwound contracts, which the courts think is due to those trades currently resulting in losses.
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