Lehman Brothers Holdings asks court to OK Heritage Fields settlement

By Lisa Kerner

Charlotte, N.C., June 23 - Lehman Brothers Holdings Inc. wants the court to approve a settlement related to its Heritage Fields project, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the settlement, Lehman would assign its debt interest with respect to the Heritage Fields project to State Street Bank and Trust Co. in exchange for a payment of approximately $125 million plus additional consideration.

Lehman would also purchase up to a $32 million senior participation interest in an existing first mortgage loan from El Toro LLC to Heritage Fields El Toro LLC, the filing said.

Heritage Fields is a 3,723-acre masterplan development in Irvine, Calif.

In June 2007, El Toro LLC agreed to loan $775 million to Heritage. At the time El Toro was a wholly owned subsidiary of LBREM REIT Holdings, LLC, which was then a non-debtor Lehman affiliate.

A hearing is set for July 14.

New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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