Cross border insolvencies and financial restructurings are remarkably opaque considering we live in the Information Age. The mission of the Centre of Main Interest (the COMI) is to light some candles in the darkness and create a forum for further discussion. The Law Offices of Tally M. Wiener, Esq. are pleased to publish the COMI blog.
We welcome comments via posts to this site. Please send inquiries via email to firstname.lastname@example.org.
Friday, December 28, 2012
Lehman’s Cash Rises to $5.6 Billion Before Creditor Payment
By Linda Sandler - Dec 27, 2012
Lehman Brothers Holdings Inc., which is due to make a third payment to creditors in March, had $5.6 billion in free cash on Nov. 30, an increase of $1.1 billion during the month.
Cash that was restricted, or unavailable at Lehman and its affiliates was $13.7 billion, including $5.8 billion set aside for disputed claims, according to a post-bankruptcy report filed in federal court in Manhattan yesterday.
The defunct investment bank, which has already paid creditors half of the $65 billion it aims to pay by 2016 or so, last month agreed to sell its Archstone Inc. unit for $6.5 billion to AvalonBay Communities Inc. and Sam Zell’s Equity Residential, scrapping plans for an initial public offering after a four-month slide in U.S. apartment stocks. Lehman also has been whittling down claims by some creditors, which would potentially add cash for distribution.
The average creditor of what was the biggest-ever U.S. bankruptcy will get about 18 cents on the dollar for an estimated $370 billion in allowed claims, Lehman has said. The firm’s September 2008 debts stood at $613 billion.
Lehman, which paid lawyers and managers almost $1.8 billion for bankruptcy work, will meet additional bills of $122 million in one-time fees this month, on top of its regular costs for post-bankruptcy work, it said.
The December bills include incentives and amounts owed to professionals that were previously held back, according to the report filed in U.S. Bankruptcy Court in Manhattan. A judge last month approved $42 million in incentive fees for Alvarez & Marsal LLC, which continues to manage the defunct firm after making almost $536 million during the bankruptcy.
Overseen by a new board since leaving bankruptcy in March, Lehman paid advisers and managers $12.8 million in November for their work during the bankruptcy. About $9.5 million went to White & Case LLP, the law firm that advised an unofficial group of creditors, according to the filing.
Lehman settled a fight with creditors in a payment plan that allotted more money to derivatives claimants including Goldman Sachs Group Inc. (GS) and less to bondholders such as Paulson & Co. Both groups had proposed rival plans to pay Lehman’s debt.
Lehman’s fee bill for post-bankruptcy work was $27.9 million in November, including $13.2 million for lead law firm Weil Gotshal & Manges LLP and $5.2 million for A&M. Total fees since March were $126.1 million. Including back bills for bankruptcy work and bills for the continuing liquidation, November’s fee tally was $40.7 million.
Lehman, once the fourth-largest investment bank, is still liquidating from offices in Manhattan’s Time & Life Building. Hedge funds and other traders turn over an average of $2 billion of claims on Lehman a month, or $100 billion from September 2008 through November 2012, according to SecondMarket Holdings Inc.
Lehman, run by Chief Executive Officer Richard Fuld when its collapse helped bring on the worst economic slump since the Great Depression, failed because of too much debt and risky real estate investments, according to a bankruptcy examiner’s report.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).