Lehman Brothers Holdings Inc.’s September 15, 2008 bankruptcy was an event of default under thousands of derivatives contracts to which a Lehman entity was a party and for which Lehman Brothers Holdings was the guarantor. This default entitled the vast majority of Lehman’s counterparties to terminate these contracts, and almost all were terminated.

In a recent Hunton & Williams client alert, we discussed some of the issues relating to the termination of credit default swap agreements that were pending before the Lehman bankruptcy court, including the enforceability of so-called “flip clauses.” (“Swap Termination and the Subordination of Termination Payments in the Lehman Bankruptcy,” December 2009.) Recently, the court ruled for Lehman on many of these issues. The court’s ruling (Lehman Brothers Special Financing Inc.