Lehman seeks court confirmation for Citi advances

NEW YORK: Bankrupt Lehman Brothers Holdings Inc is seeking court confirmation on the status of daily clearing advances provided by Citigroup Inc to its broker-dealer unit, according to court documents filed on Thursday.

Since Lehman filed for Chapter 11 bankruptcy protection on Monday, Citi has provided daily clearing advances of about $9 billion to Lehman's non-bankrupt broker-dealer, compared with about $19 billion it provided prior to the bankruptcy case, the court documents showed.

Lehman said in the court documents that Citi was providing the advances, which are used to clear and facilitate the settlement of securities and foreign exchange transactions, at the request of Lehman and the Federal Reserve Bank of New York. Court confirmation would allow Citi to continue providing the advances and hold onto collateral provided by Lehman, without fear it was violating the bankruptcy code.

Earlier this week, U.S. bankruptcy Judge James Peck offered similar confirmation to JPMorgan Chase & Co, which said, in court documents, that it had been advancing at least $87 billion to Lehman's broker-dealer, also with backing from the New York Fed.

British bank Barclays Plc has agreed to buy Lehman's core U.S. broker-dealer business for about $1.7 billion, pending bankruptcy court approval. A sale hearing on the transaction is scheduled for Friday afternoon.