It’s not easy to forget about Lehman Brothers, which filed for bankruptcy with $613-billion debt on the books. Though its bankruptcy was filed over three years ago, Lehman continues to be in the spotlight even if it’s reduced to merely an entity on paper. And it has been focusing its efforts on each creditor and past customer. In its latest move, the company is demanding that Treasury Secretary Timothy Geithner speak up in support of its $8.6 billion lawsuit against JPMorgan (NYSE:JPM).^[1] Citigroup (NYSE:C), RBS (NYSE:RBS) and Barclays (NYSE:BCS) have all been on the receiving end of Lehman’s desperate suits over the last few months.

We maintain a $39 price estimate for JPMorgan’s stock, which is quite close to the current market price.

See our full analysis of JPMorgan

Since it filed for bankruptcy in September 2008, Lehman has been arranging funds and trying its best to cut claims to be able to meet its debt obligations. As of now, the liquidation process has only been able to raise 18% of the amount it owes creditors. ((Lehman Sues Citigroup for $2.5 Billion ‘Wrongfully’ Taken, Bloomberg, Feb 9 2012))

Seeing Lehman’s approach toward the bankruptcy proceedings, it wouldn’t be wrong to say that its creditors may have to grapple with lawsuits aimed at reducing – and on some occasions even reversing – their claims. The list of such lawsuits is long. For those of you keeping track of them, and the numbers associated, the $8.6 billion lawsuit against JPMorgan, the $3 billion lawsuit against Barclays, the $2.5 billion lawsuit against Citigroup and the $346 million lawsuit against RBS will likely ring a bell. And this is just the tip of the iceberg.

But what does it mean for these banks?

Take JPMorgan for instance. Lehman believes that JPMorgan pulled out of $8.6 billion from it shortly before the bankruptcy filing to strengthen itself at Lehman’s expense. Considering the scenario where the court rules that the claim is right, JPMorgan would need to fork over that amount and get back in line with other creditors.

And when the bankruptcy proceedings eventually draw to a close, JPMorgan would be looking at a multi-billion dollar write-off. Not exactly the happy ending that banks are looking for in times when stricter capital requirements are making every cent precious.

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