Lehman sues JPMorgan over its collapse

NEW YORK (CNNMoney.com) -- Lehman Brothers' bankruptcy estate filed suit against JPMorgan Chase Wednesday, alleging that the bank demanded billions of dollars more than it needed in the firm's final days contributing to Lehman's ultimate demise.

The suit, filed in the U.S. Bankruptcy Court in the Southern District of New York, contends that Lehman, which was scrambling to stay afloat, invited JP Morgan to assist it in securing emergency financing.

The suit alleges that JP Morgan then used the intimate knowledge it learned about Lehman's books to demand as much as $8.6 billion in cash from its rival in the last four business days before it filed for bankruptcy.

By making such demands, the suit says, JPMorgan severely constrained Lehman's liquidity and impeded its ability to figure out bankruptcy alternatives while assuring itself of a higher payout in the event of bankruptcy.

"The purpose of these last-minute maneuvers was to leapfrog JPMorgan over other creditors," the plaintiffs wrote.

Lehman would ultimately shutter its doors for good on Sept. 15, 2008, earning the distinction of becoming one of the biggest bankruptcies in corporate history.

A spokesperson for JPMorgan Chase called Wednesday's lawsuit "merit-less" adding that it planned to "vigorously defend itself."

Thus far, there have been few indications that JPMorgan, or any other financial firm, had a hand in Lehman's collapse.

A report published in March by a court-appointed examiner instead assigned blame to former Lehman executives as well as the auditor who oversaw the company's books.

Lehman "repeatedly exceeded its own internal risk limits and controls," said examiner Anton Valukas.

The lawsuit filed Wednesday said it was seeking to recoup the billions of dollars demanded by JPMorgan Chase (JPM, Fortune 500) for Lehman's creditors.