Lehman liquidation trustee eyes distribution to unsecured creditors

By Caroline Salls

Pittsburgh, April 28 – Lehman Brothers Inc.’s Securities Investor Protection Act (SIPA) liquidation trustee James W. Giddens filed a report with the U.S. Bankruptcy Court for the Southern District of New York that noted that “the estate has entered a stage of substantial completion and that conditions allow for a potential fourth interim distribution to unsecured general creditors with allowed claims.”

According to a release from the trustee’s office, Giddens plans to file a motion with the court in May seeking approval for the distribution, and, if approved, would make the distribution in July. Giddens said the exact dollar amount of the distribution is not yet final.

Giddens said the proposed distribution would bring the cumulative payout to unsecured general creditors to 38%. To date, distributions to all creditors, including unsecured, secured, priority and administrative creditors, total more than $8 billion.

The trustee said the report also detailed further strides in winding down the estate, with just 444 unresolved claims capped at a total amount of $857 million left compared to 15,000 general creditor claims filed against the estate in a total amount of nearly $130 billion.

Giddens said the claims disputes remaining are in advanced stages of litigation, and the trustee continues to make every effort to resolve the disputes. The trustee said he will also continue to evaluate the possibility of additional distributions every six months and expects further distributions in the future.

“With the potential for a fourth distribution, the amount returned to general creditors continues to exceed all expectations, and there will be more to come,” Giddens said in the release.

In total, Lehman customers have received more than $106 billion, fully satisfying the 111,000 customer claims, with most claims fulfilled within weeks of the liquidation, according to the release. Secured, priority and administrative creditors have also received 100% distributions.

New York-based Lehman Brothers was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.

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