No one ever said the Lehman Brothers bankruptcy case would be easy, or quick.
Lehman Brothers Holdings Inc's lawsuit accusing JPMorgan Chase & Co of siphoning billions of dollars and hastening its record bankruptcy is unlikely to be ready for trial before April 30, 2012, under a timetable approved Wednesday by U.S. Bankruptcy Judge James Peck in Manhattan.
The May 26 lawsuit accused JPMorgan of using its unparalleled knowledge of Lehman's distress, as the main clearing bank for Lehman transactions with other parties, to extract $8.6 billion of collateral in the four business days ahead of Lehman's September 15, 2008 bankruptcy.
It said officials including JPMorgan Chief Executive Jamie Dimon took the collateral after learning from Federal Reserve Chairman Ben Bernanke and then-U.S. Treasury Secretary Henry Paulson the government would not bail Lehman out. Lehman said the bankruptcy estate and creditors deserve the collateral.
JPMorgan has denied wrongdoing.
At a Wednesday hearing, Lehman's lawyer John Quinn of Quinn Emanuel Urquhart & Sullivan LLP said each company expects to depose 50 witnesses from the opposing side. Depositions and fact-finding may not be completed until June 30, 2011.
It's a complicated, large case, Quinn told the judge.
Is it really going to take until sometime in 2012 for this case to be trial-ready? Peck asked.
We think that it will, Quinn responded.
Paul Vizcarrondo, a partner at Wachtell, Lipton, Rosen & Katz representing JPMorgan, said he agreed with the timetable.
Peck accepted it.
At this point, he deadpanned, my calendar for 2012 is mostly open, prompting much courtroom laughter.
In March, Peck authorized an accord under which JPMorgan would return several billion dollars of assets to Lehman's estate, but which gave Lehman a right to sue further.
Lehman collapsed from overexposure to commercial real estate, subprime mortgages and other risky assets.
With $639 billion of assets, it remains by far the largest U.S. company to go bankrupt.
The case is Lehman Brothers Holdings Inc et al v. JPMorgan Chase Bank NA, U.S. Bankruptcy Court, Southern District of New York, No. 10-03266. The main bankruptcy case is In re: Lehman Brothers Holdings Inc et al in the same court, No. 08-13555.
(Reporting by Jonathan Stempel in New York, editing by Bernard Orr)