The Hindu Business Line : Lehman contracts: 5 vendors face uncertainties

A big question mark
Lehman owes Aditi Technologies an amount in the ‘low thousand dollar range”.
Applabs had just signed a Master Service Agreement with Lehman.
Tata Communications: Receivables exposure due the bankruptcy filings is ‘insignificant’.
PSI Data: Work with Lehman was completed several months ago, so we are not affected.

Adith Charlie

Mumbai, Oct. 3 There is a question mark over the fate of several ongoing contracts between Lehman Brothers and five Indian technology firms.

Lehman`s engagements with firms such as Tata Communications, PSI Data Systems, Applabs, Aditi Technologies, e4e solutions etc, have not yet been ‘assigned and assumed’ to Barclays, which recently acquired the US assets of the fallen financial services giant.

In the case of ten other vendors including TCS, Wipro and Satyam whose contracts were allocated to Barclays, a “cure amount” of $ 5.8 million was collectively assigned to these outsourcing firms, according to lehmandocket.com.

A “cure amount” is generally fixed as a percentage of outstanding receivables owed by a client.

In short, Barclays will not take ownership of the earlier mentioned contracts as it had done for Lehman`s engagements with TCS, Wipro, Satyam and others.

60-day period

Barclays is learned to have a 60-day window period to decide whether it wants to pursue these unassigned contracts.

However, it is highly unlikely considering that Barclays did not pick up these contracts in the first round itself, a senior industry analyst said. However, this could not be verified as there was no response to an e-mail questionnaire sent to Mr Leigh Bruce, Head of Corporate Communications at Barclays.

Transfer to Nomura?

Since all contracts involving the five vendors were signed by the holding company (Lehman Brothers Holding Inc), it is also highly unlikely that these could be transferred to Japanese bank Nomura, which acquired Lehman`s Asian and European operations last month.

The five Indian vendors will join the list of creditors who will have to wait till the bankruptcy procedure concludes for recovering their dues (if any) from Lehman, according to a senior industry official.

Lehman owes Bangalore-based Aditi Technologies an amount in the ‘low thousand dollar range”. Aditi had sold a software product for the revenue trading side of Lehman’s business. It had also done some services consulting for Lehman, said Mr Ravindran Kittu, the company’s Marketing Director. The uncertainty lies in the engagement related to the services consulting bit, said Mr Kittu, adding that Barclays is Aditi’s client as well.

Lehman does not owe any outstanding receivables to software testing company Applabs. Yet its name has figured in Lehman`s list because it had just signed a MSA (Master Service Agreement) with Lehman and was in the process of winning its first engagement (with Lehman) when this situation developed, according to the company CEO, Mr Makarand Teje.

However, he is not perturbed as there was ‘no monetary exchange between us and Lehman’. Barclays is also Applabs’ client in the UK.

According to lehmandocket.com, several contracts signed by the American subsidiary of the Mumbai-based Tata Communications have not been included in the list of contracts assigned to Barclays. On being queried on the same a Tata Communications spokesperson said: “Tata Communications’ receivables exposure due the bankruptcy filings of Lehman Brothers is insignificant”. He did not elaborate.

Mr Sampath Iyengar, CEO, PSI Data System, when contacted via mail said that PSI`s work with Lehman was completed several months ago and hence the company is not currently affected by the turn of events at Lehman’s.

However, he did not respond to a follow-up mail that sought to understand why Lehman had mentioned PSI in its docket if its engagement with the Bangalore-based company was over.