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Travers Smith and Norton Rose face off in Lehman’s multimillion dispute with ExxonMobil

Commerical litigation heavyweights Travers Smith and Norton Rose Fulbright have been instructed by the administrators for Lehman Brothers International Europe and ExxonMobil Financial Services respectively as the parties battle it out at London’s High Court over a multimillion dollar loan.

Heard in the commercial court in mid-July by Justice Blair, the dispute between parties arose after the now-defunct Lehman Brothers went into administration in 2008, leaving an outstanding repo agreement to Exxon. Exxon is disputing the value of about $250m securities used in a repurchase agreement that went into default when Lehman filed for bankruptcy.

The broad issue is whether, when correctly valued under a standard global master repurchase agreement, the value of the collateral exceeded $250m for which Lehman argues Exxon owes it money, or whether the collateral was worth less than $250m, as Exxon argues.

Exxon argues that its owed $8.6m while PwC, the bank’s administrators, want $13.9m from Exxon. PwC estimates there will be a surplus of an estimated £7.8bn ($10.3bn) after the creditor claims are resolved.

The trial faced further contention last week when Exxon’s expert witness, David Ellis, had to admit making a price error in calculating the value of an equity portfolio that was part of a deal between the bank and the energy giant.

The trial is one of several ongoing cases that involve parties fighting over Lehman’s assets almost eight years after the bank collapsed, according to PwC’s latest liquidation progress report.

Rhodri Davies QC of One Essex Court has been instructed by Travers Smith while Exxon is represented by Daniel Toledano QC of One Essex Court and Norton Rose Fulbright.

Closing submissions are before Justice Blair this Thursday (28 July).

Other high-profile litigation on the books for Travers this year includes advising on the ongoing Vincent Tchenguiz case, where the firm is representing several defendants including failed Icelandic bank Kaupthing and Jóhannes Rúnar Jóhannsson which Tchenguiz accused of ‘conspiring to instigate’ the SFO probe into their business affairs that led to dawn raids on their premises in 2011.