The banks being sued by Lehman Brothers Holdings Inc. in a long-simmering derivatives fight say that Lehman is seeking an "undue advantage" in the litigation by prohibiting the banks from seeking a dismissal without first receiving class-action status, Dow Jones Daily Bankruptcy Review reported today. In bankruptcy court filing on Monday, lawyers for 77 banks and other entities said that Lehman's bid to put the brakes on their bid to dismiss the lawsuit was unfair, and that receiving approval for class-action status should be a "secondary" matter. Lehman affiliates Lehman Brothers Special Financing Inc. and Lehman Brothers Financial Products Inc. in September 2010 sued the banks to recover funds the investment bank says were wrongly transferred to credit-default swap counterparties after it filed for bankruptcy protection. The swaps contained “flip clauses” that give investors priority over a counterparty that defaults.
