Lehman To Pay $43 Million To Duped Insurers

A US bankruptcy judge has approved a $US45 million ($43.3m) settlement between Lehman Brothers Holdings' Australian unit and a group of insurers over claims the bank misled a group of councils, charities and churches into buying risky securities backed by US mortgages, The Australian reported. Judge James Peck, of the US Bankruptcy Court in New York, yesterday signed off the settlement between 10 US insurance companies and the liquidators of Lehman Brothers Australia to settle the matter over collateralised debt obligations, or CDOs. The insurers, who admitted no wrongdoing as part of the settlement, will pay $US45m to Lehman Australia. In return, the insurers will be off the hook from any future litigation involving the CDOs. Lehman Australia filed for the equivalent of bankruptcy protection in Australia in 2009 with the plan that liquidators would sell off the unit's assets and wind down the business. The Australian liquidators put the Lehman unit into Chapter 15, the section of the US Bankruptcy Code dealing with foreign insolvencies, in New York in January last year. Judge Peck is overseeing Lehman Brothers Australia's Chapter 15 case and that of its US-based parent. Read more. (Subscription required.)