Cleary Gottlieb won a decision in the Second Circuit on behalf of Barclays Capital against FirstBank Puerto Rico, which claimed that Barclays had improperly acquired securities pledged by FirstBank to a Lehman Brothers over-the-counter derivatives entity that were subsequently sold to Lehman Brothers Inc. and ultimately purchased by Barclays in the Lehman bankruptcy sale.
In an order issued on March 29, 2016, the Second Circuit affirmed the judgment of the Bankruptcy Court (and the District Court’s affirmance of that judgment) dismissing the claims against Barclays on the ground that the sale of the securities to Lehman Brothers Inc. cut off FirstBank’s interest in the securities pursuant to the terms of FirstBank’s ISDA Master Agreement and Credit Support Annex with Lehman.
The Second Circuit also affirmed the Bankruptcy Court’s entry of a contempt finding against FirstBank and its award of $2.5 million in attorneys’ fees incurred through that judgment based on FirstBank’s violation of the injunction contained in the Bankruptcy Court Sale Order, which the court agreed clearly prohibited the litigation by FirstBank.