By Patrick Fitzgerald
Of DOW JONES DAILY BANKRUPTCY REVIEW
Lehman Brothers Holdings Inc. (LEHMQ) on Tuesday officially
emerged from Chapter 11 bankruptcy protection after nearly three
and half years and said creditors of the investment bank will start
getting paid next month.
Lehman, once the nation's fourth largest investment bank
collapsed in September 2008 in the largest bankruptcy in history,
has some $10.5 billion it intends to start doling out to creditors
on April 17 under an initial distribution.
Since its collapse a team of bankruptcy professionals under the
direction of Alvarez & Marsal Inc.'s Bryan Marsal and John
Suckow has managed Lehman's assets, including real-estate holdings,
corporate debt and derivatives.
"We are proud to announce Lehman's exit from Chapter 11 and
entrance into the final stage of this process--distributions to
creditors," Suckow, who has been serving as Lehman's president,
said in a statement.
Although Lehman has emerged from bankruptcy, its case is far
from over and will likely continue for years as it liquidates its
assets. Lehman's new seven-member board of directors, which
includes executives and directors of businesses and subsidiaries
related to Delphi Automotive PLC (DLPH), Morgan Stanley (MS),
American International Group Inc. (AIG) and Capmark Financial Group
Inc. (CPMK) will guide the company's liquidation.
Among Lehman's creditors awaiting payment include both small
investors and large, among them hedge-fund managers Paulson &
Co. and Elliott Management, Goldman Sachs Group Inc. (GS) and
Silver Point Capital.
Late last year, U.S. Bankruptcy Judge James Peck approved
Lehman's creditor-payback plan, which should distribute about $65
billion and treats creditors of Lehman subsidiaries better than
those of the parent company.
Since then, the investment bank has been involved in settlement
negotiations with creditors like the Internal Revenue Service,
Fannie Mae (FNMA) and insolvency administrators of more than 80
Lehman affiliates over disputed claims.
A second distribution is tentatively scheduled for Sept. 30.
However that payout could be reduced pending the outcome of a legal
fight over intercompany loans and derivatives guarantees between
Lehman and its Switzerland-based affiliate, Lehman Brothers Finance
AG, which conducted most of the bank's foreign derivatives
business.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Patrick Fitzgerald, Dow Jones Daily Bankruptcy Review;
202-862-3544; patrick.fitzgerald@dowjones.com