Lehman and J.P. Morgan Seek Approval of $1.42 Billion Settlement -- Week Ahead
February 05 2016 - 12:21PM
Dow Jones News
By Stephanie Gleason
Ahead of a long weekend, companies are looking for approval from
bankruptcy judges next week on a variety of motions, including one
signoff that would largely conclude an old dispute.
On Monday, J.P. Morgan Chase & Co. and the remnants of
Lehman Brothers Holdings Inc. will ask for approval of a $1.42
billion settlement that resolves claims that J.P. Morgan illegally
siphoned billions of dollars from Lehman before its collapse.
The deal resolves the bulk of Lehman's $8.6 billion lawsuit
against J.P. Morgan and the bank's counterclaims against Lehman. It
also puts to rest Lehman's challenges over J.P. Morgan's closeout
of thousands of derivatives contracts following the investment
bank's collapse.
Although the settlement doesn't resolve all the claims between
Lehman and J.P. Morgan, it ends a "significant portion" of their
disputes, court papers said, and allows the post-bankruptcy Lehman
estate to make another $1.5 billion distribution to the investment
bank's creditors.
The settlement comes after a federal judge last fall ruled for
J.P. Morgan, saying the bank didn't abuse its leverage as Lehman's
primary clearing bank to force the investment bank to hand over
more collateral in the weeks before its September 2008
collapse.
On Thursday, Magnum Hunter Resources Corp. will ask a bankruptcy
judge to allow it to begin polling creditors on the terms of its
proposed restructuring plan.
The Texas oil-and-gas company entered bankruptcy in December
with the terms of its plan largely in place but requiring approvals
from creditors and the bankruptcy court to fully implement the
deal.
The company is proposing a debt-for-equity swap that would hand
ownership to the lenders and bondholders in exchange for
forgiveness of $1 billion in pre-bankruptcy debt and a $200 million
bankruptcy loan. General unsecured creditors are slated to share a
$20 million cash pool, according to court documents.
The company's chief executive has said that the massive
deleveraging of Magnum's balance sheet would put it in a strong
position upon its exit from bankruptcy and added that this deal is
an "outlier" in an industry that has been ravaged by low and
falling oil and gas prices.
On Tuesday, Alpha Natural Resources will ask for
bankruptcy-court approval of several of its coal mines.
The company canceled an auction for more than 30 active and
closed mines, citing weak interest, but said it has offers on
several of the assets.
With coal prices at historic lows, reduced domestic and
international demand and increasing regulatory pressures, the
industry troubles that have sent a number of large coal-mining
companies into chapter 11 protection are also sidelining
buyers.
An Alpha lawyer told the bankruptcy judge in court last month
that in light of the lack of buyer interest in "many assets," the
company would be retaining a "large group of mines" as part of its
restructuring and would have to contend with the significant
environmental obligations connected to those mines.
-Jacqueline Palank and Patrick Fitzgerald contributed to this
article.
Write to Stephanie Gleason at stephanie.gleason@wsj.com
(END) Dow Jones Newswires
February 05, 2016 12:06 ET (17:06 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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