Lehman files new plan to pay cred­i­tors

Shanghai Daily - - BUSINESS -

LEHMAN Broth­ers Hold­ings Inc said it has re­ceived a wider base of sup­port from cred­i­tors for its re­or­ga­ni­za­tion, and filed a new plan it hopes will help it emerge from bank­ruptcy and pay cred­i­tors faster.

The com­pany said it be­lieves it has an “agree­ment in prin­ci­ple” with ma­jor cred­i­tor groups on an amended re­or­ga­ni­za­tion plan filed in US Bank­ruptcy Court in Man­hat­tan. This in­cludes sup­port from a com­mit­tee of un­se­cured cred­i­tors, Lehman said.

The com­pro­mise is a “rea­son­able, fair and ef­fi­cient means to re­solve and avoid the vex­a­tious, mul­ti­fac­eted and pro­tracted lit­i­ga­tion and de­lay that might oth­er­wise oc­cur,” Lehman said in a court fil­ing yes­ter­day.

Lehman had been the fourth largest US in­vest­ment bank prior to fil­ing for Chap­ter 11 pro­tec­tion from cred­i­tors on Septem­ber 15, 2008, with an es­ti­mated US$ 639 bil­lion of as­sets. Its bank­ruptcy fil­ing re­mains the largest in US his­tory, and was a ma­jor trig­ger for the global fi­nan­cial cri­sis.

Bryan Marsal, Lehman’s chief ex­ec­u­tive and a re­struc­tur­ing spe­cial­ist, has said the com­pany ex­pects to dis­trib­ute roughly US$ 60 bil­lion to cred­i­tors who have roughly US$322 bil­lion of al­lowed claims, equal to about 18.6 cents on the dol­lar.

Ac­cord­ing to court pa­pers, a key change from Lehman’s ear­lier pro­posed plan is that var­i­ous sums that would have gone to cred­i­tors of sev­eral Lehman sub­sidiaries will in­stead go to un­se­cured cred­i­tors of Lehman’s par­ent com­pany.

De­spite this, hold­ers of un­se­cured debt from Lehman’s par­ent would re­ceive about 21.1 cents on the dol­lar, down from 21.4 cents un­der an ear­lier Lehman plan.

Some cred­i­tors, such as a group that in­cludes hedge fund man­ager John Paul­son, had been seek­ing roughly 24 cents on the dol­lar.

Un­se­cured cred­i­tors of Lehman Broth­ers Spe­cial Fi­nanc­ing Inc, the com­pany’s de­riv­a­tives unit, would re­ceive 27.9 cents on the dol­lar un­der the re­vised plan.

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