Evergreen Solar Inc., a small maker of solar power panels that had loaned stock to Lehman Brothers before the investment bank filed for bankruptcy, has sued Lehman, charging that it refused to return the shares. The suit also names Barclays PLC, which subsequently bought Lehman.
The suit, which asserts that Lehman did not have title to 30.9 million shares of Evergreen common stock that Evergreen loaned to Lehman in July, seeks the return of the shares.
Evergreen has demanded that Barclays immediately return roughly 12.2 million shares that it said the British bank obtained from Lehman after the bankruptcy filing. Michael El-Hillow, Evergreen’s CFO, said the rest of shares are believed to have been sold, according to a report on Cleantech.com. He told the website that Evergreen first learned about Barclays’ claim on the shares when the bank filed a notice with the Securities and Exchange Commission on Oct. 8.
“We are outraged that a substantial number of our shares were transferred from Lehman Brothers in bankruptcy in complete disregard for Lehman Brothers’ obligations to return the shares under its share lending agreement with Evergreen Solar,” El-Hillow said in a press release. “This violation of our contract with Lehman was significantly compounded by the fact that Barclays was able to acquire this valuable asset, our shares, which Lehman no longer had the power to transfer to any party other than Evergreen Solar.”
Barclays could not immediately be reached for comment, and Lehman referred a call to a public relations firm that declined to comment.
Evergreen loaned the 30.9 million shares to Lehman as part of a $375 million convertible debt offering in July 2008. According to the Boston Globe, under the deal the shares were to be further loaned to hedge funds that want to short Evergreen’s stock.
But upon declaring bankruptcy Lehman did not immediately return the shares, as had been agreed upon contractually, Evergreen said.
Evergreen is claiming that it was supposed to have been protected. For example, if Lehman’s debt rating was cut or the company was headed for bankruptcy, Evergreen was to get back its 30.9 million shares, according to the Globe, citing the company’s lawsuit.