Tags: lehman | payout | bankruptcy

Lehman Defends $65 Billion Payout Plan

Tuesday, 23 Aug 2011 08:56 PM

Lehman Brothers Holdings Inc defended Tuesday a proposed plan to end the largest bankruptcy in U.S. history, but said it will alter certain language to resolve objections from the U.S. Trustee.

Lehman filed court papers in U.S. Bankruptcy Court in Manhattan asking Judge James Peck to approve the outline for its $65 billion payback plan in the face of 18 objections from various parties, including one from the office of U.S. Trustee Tracy Hope Davis.

If Peck green-lights the outline at a hearing scheduled for Tuesday, it will be sent to creditors for a vote. Lehman, which has negotiated nonstop with creditor groups in an attempt to gain widespread support for its plan, hopes to end its bankruptcy and begin paying back creditors by early 2012.

The trustee argued in an Aug. 11 objection that the outline was too vague on certain issues, including the post-bankruptcy role of the committee installed to oversee fee requests from professionals in the case.

Lehman said it will add language explaining that the committee will continue to exist post-bankruptcy and will be disbanded after professionals submit their final fee applications.

The company also agreed to add a paragraph specifying the future fate of LAMCO, its asset management entity, after the trustee requested more information.

Chief Executive Bryan Marsal told Reuters last week Lehman was shelving plans to try to turn LAMCO into a long-term business in the face of opposition from creditors.

Objections from the U.S. Trustee, a Justice Department agency that oversees bankruptcy cases, can be influential because that office, unlike creditors, ensures compliance with bankruptcy laws and does not have a stake in the outcome.

Lehman was more steadfast about objections from other creditors, such as Bundesverland deutscher Banken eV and Mason Capital Management, which said the plan was too vague about how Lehman would treat creditors of non-bankrupt foreign affiliates. Lehman said those objections should be put off until the plan confirmation stage of the bankruptcy.

Wilmington Trust Co, trustee for between $49 billion and $73 billion in claims, withdrew its objection that Lehman did not give enough information on how structured securities claims would be treated.

 

WIDESPREAD SUPPORT

Lehman characterized its plan as an "array of compromises," praising "Herculean" negotiation efforts that yielded support from the key members of its "vast and diverse" creditor pool.

Included among the supporters are two groups that hold nearly one-third of the roughly $320 billion in overall claims against Lehman. Those groups -- a bondholders led by hedge fund Paulson & Co, and derivatives creditors, including Goldman Sachs Group Inc and Morgan Stanley -- proposed their own plans before accepting Lehman's compromise.

Asian affiliates holding about $20 billion in claims have also pledged support.

Lehman's plan would pay creditors an average 20 cents on the dollar. Some groups would receive more, including derivatives creditors who would get nearly 28 cents on the dollar.

If Peck approves the plan outline, creditors would vote on it on Nov. 4 and it could win court approval as early as December.

Lehman filed for bankruptcy on Sept. 15, 2008, with $639 billion in assets. The filing was six times larger than any previous U.S. bankruptcy and was considered to be a key catalyst to the financial crisis.

The case is In re Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

© 2017 Thomson/Reuters. All rights reserved.

   
1Like our page
2Share
Companies
Lehman Brothers Holdings Incdefended Tuesday a proposed plan to end the largest bankruptcy in U.S. history, but said it will alter certain language to resolve objections from the U.S. Trustee. Lehman filed court papers in U.S. Bankruptcy Court in Manhattan asking Judge...
lehman,payout,bankruptcy
558
2011-56-23
Tuesday, 23 Aug 2011 08:56 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved