A court-appointed examiner investigating Lehman Brothers Holdings Inc.’s bankruptcy has been exploring whether the Federal Reserve improperly cut in front of other creditors owed money in the $613 billion bankruptcy case, records show.
Billing records filed with the court show the examiner is investigating an issue that has angered many of Lehman’s creditors: how the Federal Reserve and the New York Fed — which lent Lehman $46 billion in cash and securities before its bankruptcy filing last September — were paid promptly and in full, while tens of billions of dollars in other debts were left to be sorted out in court. It remains unclear when and how much Lehman creditors will be repaid.
I need to gather more info on this or at least hear out what others have to say. Anyway, if it is indeed proven that the Fed get that preferential treatment to get paid ahead of the creditors, it would probably be a tough battle for the creditors.