Leading hedge funds have been buying up Lehman Brothers’ debt in the hope that the bankrupt investment bank’s estate will be able to win court battles to recover billions of dollars in collateral held by competitors with whom it did business.

The bulk of the potential claims stems from JPMorgan Chase’s role as a clearing bank for Lehman in the repurchase – or repo – markets. Lehman borrowed heavily in the repo markets – in which banks receive overnight loans in return for pledges of collateral – a practice that left it susceptible to a loss of confidence.