Lehman Settles Lawsuit Against N.Y. Giants

Lehman Brothers and the New York Giants have settled their long-running dispute over a soured interest-rate swap tied to the financing of the football team’s stadium.

Lehman sued Giants Stadium LLC in 2013, claiming it was owed $100 million under the swap. Giants Stadium LLC was set up by the team’s owners, the Mara and Tisch families, to fund the construction of MetLife Stadium.

To finance the stadium, the Giants unit issued $650 million in bonds, the bulk of which were underwritten by Lehman. The Giants entered an interest-rate swap agreement with the bank.

Lehman offered a lower interest rate to the Giants to beat out Goldman Sachs Group Inc. for the business. But in September 2008, Lehman collapsed, causing it to default on the deal and apparently creating a loss for the Giants.

The Giants eventually filed a $301.8 million claim against the investment bank and then sold the claim to Seth Klarman’s Baupost Group hedge fund, a firm which specializes in distressed debt investments.

Lehman’s lawsuit alleged Baupost and Giants Stadium then “devised a plan to ratchet up the pressure on Lehman to settle at an unreasonable level” by nearly doubling the claim against Lehman and its derivatives subsidiary to $585 million.

Terms of the settlement, announced in a court filing, weren’t disclosed. Representatives for Lehman and the Giants couldn’t be reached for comment.

Write to Patrick Fitzgerald at [email protected]. Follow him on Twitter at @PatFitzgerald23