15-149-cv 

FirstBank Puerto Rico v. Barclays Capital Inc.

 

UNITED STATES COURT OF APPEALS 

FOR THE SECOND CIRCUIT 

SUMMARY ORDER 

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A 

SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED 

BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. 

WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY 

MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE 

NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY 

OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 

 At a stated Term of the United States Court of Appeals for the Second Circuit, held at the 

Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the 

29th day of March, two thousand sixteen. 

Present: PIERRE N. LEVAL, 

 ROSEMARY S. POOLER, 

 RICHARD C. WESLEY, 

 Circuit Judges. 

_____________________________________________________ 

IN RE: LEHMAN BROTHERS HOLDINGS, INC., 

 Debtor.

_____________________________________________________ 

FIRSTBANK PUERTO RICO, 

 

 Plaintiff-Appellant, 

 v. 15-149-br 

BARCLAYS CAPITAL INC., 

 Defendant-Appellee. 

_____________________________________________________ 

 

Appearing for Appellant: Jeffrey A. Mitchell, Dickstein Shapiro LLP (Judith Cohen, on the 

brief), New York, NY. 

Appearing for Appellee: Boaz S. Morag, Cleary Gottlieb Steen & Hamilton LLP (Lindsee 

P. Granfield, on the brief), New York, NY. 
2 

Appeal from the United States District Court for the Southern District of New York (Buchwald, 

J.). 

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, 

AND DECREED that the order of said District Court be and it hereby is AFFIRMED. 

 FirstBank Puerto Rico appeals from the December 29, 2014 decision of the United States 

District Court for the Southern District of New York (Buchwald, J.) which affirmed the May 10, 

2013 decision of the United States Bankruptcy Court for the Southern District of New York 

(Peck, B.J.). The decision denied FirstBank’s attempt to recover from defendant Barclays 

Capital, Inc. certain securities that FirstBank pledged to Lehman Brothers Special Financing Inc. 

(“LBSF”) as security for an interest rate swap agreement. FirstBank also appeals from the district 

court’s decision affirming the bankruptcy court’s imposition of sanctions for contempt on 

FirstBank. We assume the parties’ familiarity with the underlying facts, procedural history, and 

specification of issues for review. 

 We affirm substantially for the reasons set forth in the thorough opinions of the 

bankruptcy and district courts below. The bankruptcy court held, and the district court affirmed, 

that LBSF’s sale of the securities that FirstBank initially posted as collateral to Lehman Brothers 

Inc. (“LBI”) cut off FirstBank’s interest in the collateral against LBI (or any subsequent 

transferee) pursuant to the International Swaps and Derivatives Association Master Agreement 

and Credit Support Annex. The bankruptcy and district courts also held that the securities at 

issue were transferred to Barclays as part of its purchase of assets in the underlying bankruptcy 

proceedings. The appropriate venue to litigate whether such securities were transferred as part of 

the sale was bankruptcy court, not a district court proceeding. 

 We also affirm the orders requiring FirstBank to pay Barclays’s “reasonable counsel fees 

and costs incurred in defending against this litigation that has been pursued knowingly by 

FirstBank in violation of the Sale Order.” In re Lehman Bros. Holdings Inc., No. 08-13555, 

2013 WL 6283572 (Bankr. S.D.N.Y. Dec. 3, 2013), aff’d, 526 B.R. 481 (S.D.N.Y. 2014). As 

noted by the district court, the “Sale Order clearly prohibits suits with respect to ‘Purchased 

Assets’ as defined in the ‘Purchase Agreement,’ the Sale Order clearly incorporates the 

Clarification Letter into its definition of the ‘Purchase Agreement,’ and the Clarification Letter 

clearly defines ‘Purchased Assets’ to include the collateral.” In re Lehman Brothers, 526 B.R. 

481, 496 (S.D.N.Y. 2014), as corrected (Dec. 29, 2014). Moreover, the sanctions were imposed 

only after extensive discovery and after Barclays offered First Bank an opportunity to withdraw 

its lawsuit without sanctions. 

 We have considered the remainder of FirstBank’s arguments and find them to be without 

merit. Accordingly, the order of the district court hereby is AFFIRMED. 

 FOR THE COURT: 

 Catherine O’Hagan Wolfe, Clerk