Lehman Brothers Treasury gives update on notes exchange, settlement

By Caroline Salls

Pittsburgh, March 15 – Lehman Brothers Treasury Co. BV (LBT) will retain $19.6 billion of a $34.55 billion intercompany claim against Lehman Brothers Holdings Inc. (LBHI) following the completion of a solicitation process under which some qualified noteholders were given the option to receive substitute notes, according to a news release.

LBT said noteholders holding eligible notes representing roughly €14 billion of the €24.76 billion in total acknowledged or otherwise admitted claims against it elected to receive substitute notes in exchange for their eligible notes.

The retained portion of the claim against LBHI will be used to fund future distributions to holders of substitute notes.

In accordance with its partial winddown, LBT said it has entered into a settlement agreement with former affiliates LBHI and Lehman Brothers Special Financing Inc. (LBSF), which are holders of €2.44 billion and €750.43 million in admitted ordinary claims, respectively, representing 9.84% and 3.03% of all acknowledged or otherwise admitted claims against LBT.

Under the settlement, LBHI and LBSF will receive an in-kind distribution of portions of the intercompany claim in the respective amounts of $3.4 billion and $1.05 billion and a proportionate amount of LBT’s cash on hand subject to various deductions, addbacks and adjustments for purposes of allocating expenses and reserves.

Creditors of LBT who were not eligible or did not elect to receive substitute notes will receive a final cash distribution from LBT funded with available cash and the proceeds of the sale of a portion of the intercompany claim through an auction process which is currently scheduled to occur on March 20. As a result of the solicitation process and the settlement, LBT said it expects to place about $10.5 billion of the intercompany claim into the auction.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.