Lehman Brothers Holdings Inc. and three of its subsidiaries (together, Lehman) have commenced an adversary proceeding in the Lehman bankruptcy against JPMorgan Chase & Co. and several of its subsidiaries (together, J.P. Morgan) that were counterparties to various derivative contracts with Lehman.  Lehman’s bankruptcy constituted a default under those derivative contracts, allowing the J.P. Morgan counterparties to terminate the contracts early and submit claims for amounts allegedly owed by Lehman.  The Lehman entities are now challenging the claims filed by J.P. Morgan in the bankruptcy, attacking them in two ways.  This article summarizes Lehman’s complaint and includes insight from Solomon J. Noh, a partner in the Bankruptcy & Reorganization Group at Shearman & Sterling LLP, on valuing terminated derivatives, cross affiliate setoff and related matters.