In Re: Lehman Brothers, 703 F. App'x 18

In September 2008 Lehman Brothers Holdings (LBHI) filed for bankruptcy; LBHI, Lehman Brothers Inc. (LBI), and LB 745 LLC sold most of LBI’s businesses to Barclays under an Asset Purchase Agreement (APA) that required Barclays to offer employment to Transferred Employees and to pay certain 2008 annual bonuses to those who accepted.
Jonathan Hoffman (through 1EE LLC) and Wayne Judkins accepted Barclays offers and worked there; both later filed claims in LBI’s liquidation for unpaid LBI bonuses.
Hoffman’s pre-bankruptcy LBI compensation contracts entitled him to staged bonuses totaling roughly $83 million (with a $7.7 million 2007 second-installment payment due in early 2009); Barclays agreed to pay Hoffman $83 million (plus additional compensation later) in modified timing/structure.
Judkins had a short LBI tenure with a written guaranteed 2008 bonus of $800,000 (which Barclays paid in full); he also asserted an oral performance bonus promise from LBI managers.
The bankruptcy court found Barclays paid the bonuses LBI owed (except the $7.7 million 2007 amount, which the APA did not cover); the district court largely affirmed but disallowed all claims on account of appellants’ acceptance of Barclays payments. The Second Circuit affirmed in part and reversed in part.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Barclays’s payment of bonuses discharged LBI’s bonus obligations	Hoffman/Judkins: LBI remains liable despite Barclays payments; they can claim against LBI	Trustee: Barclays’s performance discharged LBI because the APA delegated those bonus obligations to Barclays and Barclays paid	Held: Barclays’s payment discharged LBI for all delegated 2008 bonuses; appellants cannot recover those amounts from LBI
Whether Hoffman’s $7.7M 2007 bonus is covered by the APA	Hoffman: Should be barred from LBI only if APA covered it; seeks recovery from LBI for 2007 amount	Trustee: Unjust enrichment argument that Hoffman was paid substantially by Barclays so cannot recover from LBI	Held: $7.7M was outside APA delegation; Hoffman may pursue that unpaid 2007 bonus claim against LBI
Whether oral promises to Judkins create additional enforceable bonus rights	Judkins: Oral promises by LBI managers entitled him to further bonuses	Trustee/Barclays: LBI’s bonus policy required written guarantees; oral promises unenforceable	Held: Oral promises fail; Judkins not entitled beyond the written $800,000 guarantee
Whether judicial estoppel bars LBI/Trustee from asserting Barclays satisfied obligations	Hoffman: LBHI previously took contrary position; LBI should be estopped	Trustee: Prior position was LBHI (not LBI) and was not adopted by a court	Held: Judicial estoppel does not apply; criteria unmet

Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918 (2d Cir.) (delegate’s performance discharges delegator when performance does not materially vary)
Headrick v. Rockwell Int’l Corp., 24 F.3d 1272 (10th Cir.) (delegation; delegate performance discharges original obligor)
Celli v. First Nat’l Bank (In re Layo), 460 F.3d 289 (2d Cir.) (standard of review for bankruptcy appeals)
Adelphia Recovery Tr. v. HSBC Bank USA, Nat’l Ass’n (In re Adelphia Recovery Tr.), 634 F.3d 678 (2d Cir.) (elements for judicial estoppel)
Georgia Malone & Co., Inc. v. Rieder, 19 N.Y.3d 511 (N.Y.) (unjust enrichment principles)