Justice Sirikah

Lehman Brothers Holdings Inc. (PinkSheets: LEHMQ) Administrators Seeking an Out-of-Court Settlement with Creditors

by Justice Sirikah October 6, 2009
lehmq_logo.jpgActing in its capacity as the administrator of the U.K business enterprises owned by Lehman Brothers Holdings Inc. (PinkSheets: LEHMQ), PricewaterhouseCoopers (PwC) is, for the second time, working on a plan to skip court proceedings and directly return $8.9 billion of frozen assets to creditors, including hedge funds, the company said on Monday. The first attempt to return the assets was overruled by a British High Court in August on the absence of authority to bind uncooperative creditors to the settlement.

  In the new proposal dubbed “Plan B”, PwC said it aims to come into agreement with at least 90 percent of the bank’s creditors so as to ensure a remote possibility of laying charges by those that decide not to participate. In the meantime, the administrator is also awaiting the outcome of the October 26 hearing on the appeal to the objection of its earlier plan that required 75 percent of creditors to approve.

  A PwC spokesman was quoted saying: “At the moment we’ve been able to return about $13 billion of $30 billion on a claim-by-claim basis, but this process will take a lot of time...We’re looking to return house assets such as shares that Lehman were holding on behalf of hedge funds and the like, and to get people to come forward and tell us what they are owed, so we can sort out the mess”. According to the administrators, asset claims must be made by January 31, 2010.

  Assets have been entrapped since the investment firm made history by becoming the biggest fatality of the credit crunch when it filed for Chapter 11 bankruptcy protection on September 15, 2008, sending tremors to thousands of jobs around the world, especially the banking industry. Hedge-fund assets that have been returned so far under a number of other techniques amount to between $2 billion and $3 billion.

  Monday’s news made a two cents difference in the company’s share price, closing at $0.19, from $0.17.


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