Dante CDO ruling sets up US/UK swap conflict

29 Jan 2010

A landmark ruling by the Lehman Brothers bankruptcy court this week has cast a shadow over the securitisation market, rendering a near-ubiquitous market practice void and threatening the ratings of thousands of deals.

Judge James Peck granted Lehman’s motion for summary judgment in a dispute with BNY Corporate Trustee Services, trustee for the Dante CDO programme, over the priority of payments in the swap to which a Lehman affiliate was the counterparty.

The transaction documents stated that Lehman’s interest in the note ...

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