Lawsuit seeking $19.6 million severance from Barclays in Lehman bankruptcy case is continued

By Rebecca Melvin

New York, May 13 - Whether Barclays Capital Inc. is responsible to pay a former employee's huge severance as part of liabilities assumed with the Lehman Brothers Holdings Inc. asset purchase remains to be seen as litigation before the U.S. Bankruptcy Court for the Southern District of New York heard Wednesday lived to see another day.

Barclays was seeking to dismiss the case.

Judge James M. Peck made no secret of what he thought of Maximillian Coreth's lawsuit against Barclays for a total severance consideration worth $19.6 million. He said that given the current political milieu in which American International Group Inc. executives have been pilloried for excessive compensation and bonuses and in which the likes of Gretchen Morgenson of the New York Times write routinely about the excesses of Wall Street, it's "absurd" for plantiff's counsel to try to make it seem rational and reasonable.

Nevertheless, Peck continued the case to allow both sides to further brief on any issue deemed relevant to the Barclay's motion to dismiss.

"It's an extreme case you're pressing," Peck told counsel for the plaintiff, William Gross of Eaton & Van Winkle.

To which Gross replied: "You may view the facts as extreme, but the law is not extreme."

Coreth was terminated in October 2008, shortly after Barclays bought the Lehman assets following Lehman's Sept. 15 bankruptcy filing.

At that time, Barclays offered Coreth severance of $1.96 million and 26 weeks of salary, or about $100,000. But commodities broker Coreth, a so-called high performer hired away from Morgan Stanley by Lehman Brothers Inc. in the spring of 2008, refused, seeking to recover what he was promised under his Lehman contract.

An attorney who was not identified, made a statement on the record on behalf of Coreth at the end of the hearing. He said Coreth was "dumped out" in the midst of a recession after being hired away from Morgan Stanley. His situation is not comparable to AIG's, instead, he was a contributing member of society who was going to be remunerated, and he became unemployed.

Peck said at a time when the global economy is reeling in part because Lehman filed for bankruptcy, and when the auto industry is in distress, and when financial institutions through too big to fail have survived on life support provided by the U.S. government, people legitimately have to question compensation arrangements that may have driven management to take unacceptable risk.

New York-based Lehman Brothers was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008 Its Chapter 11 case number is 08-13555.

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