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Lehman Liquidation Plan Won’t Succeed, Hedge Fund Centerbridge Says
By Linda Sandler - Jul 15, 2011 8:57 PM GMT+0200 .
Lehman Brothers Holdings Inc. (LEHMQ)’s $65 billion plan to liquidate its assets in bankruptcy won’t win creditors’ approval, hedge fund Centerbridge Capital Partners LLC said in a court filing.
“Numerous” other creditors may join Centerbridge in voting against Lehman’s plan, a “flawed construct” that “subsidizes” some groups at others’ expense, it said. Anchorage Capital Group LLC said it was backing Centerbridge, according to a filing today in U.S. Bankruptcy Court in Manhattan.
Lehman shares jumped about 8.6 percent after Centerbridge’s opposition was reported, trimming earlier losses. The stock was down 3.9 percent to 5 cents in over-the-counter trading at 2:28 p.m. New York time.
Lehman said this month that creditors holding more than $100 billion in claims gave their support to the company’s latest payout plan, which allots more money to a group including Goldman Sachs Group Inc. (GS) and less to bondholders including Paulson & Co. The two rival groups signed onto the revised plan after battling to control the largest corporate liquidation in U.S. history.
Centerbridge made its filing “to advise the court that despite the purported consensus supporting the debtors’ plan, Centerbridge and it believes numerous other creditors do not believe that the new plan is confirmable” and will be opposing the confirmation, the hedge fund said.
Lehman Chief Executive Officer Bryan Marsal didn’t immediately respond to an e-mail seeking comment. Spokeswoman Kimberly Macleod declined to comment.
‘Horse Trading’
Lehman’s compromise proposal was “a product of horse trading” among investors who were noisiest in objecting to the defunct firm’s earlier payout formulas, Centerbridge said in its filing. To win them over, Lehman was “siphoning value away from other creditors,” Centerbridge said.
Holders of claims against Lehman’s commercial paper unit were among the losers being forced to subsidize noisier creditors, according to Centerbridge. The hedge fund said it had Lehman’s permission to conduct research on these issues.
Lehman aims to confirm its plan this year and start distributing a “significant” amount of its $21 billion in available cash shortly after, Lehman lawyer Lori Fife told Bloomberg on July 1.
Once the world’s fourth-biggest investment bank, Lehman filed for bankruptcy on Sept. 15, 2008, with assets of $ 639 billion.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.
Lehman Liquidation Plan Won’t Succeed, Hedge Fund Centerbridge Says
By Linda Sandler - Jul 15, 2011 8:57 PM GMT+0200 .
Lehman Brothers Holdings Inc. (LEHMQ)’s $65 billion plan to liquidate its assets in bankruptcy won’t win creditors’ approval, hedge fund Centerbridge Capital Partners LLC said in a court filing.
“Numerous” other creditors may join Centerbridge in voting against Lehman’s plan, a “flawed construct” that “subsidizes” some groups at others’ expense, it said. Anchorage Capital Group LLC said it was backing Centerbridge, according to a filing today in U.S. Bankruptcy Court in Manhattan.
Lehman shares jumped about 8.6 percent after Centerbridge’s opposition was reported, trimming earlier losses. The stock was down 3.9 percent to 5 cents in over-the-counter trading at 2:28 p.m. New York time.
Lehman said this month that creditors holding more than $100 billion in claims gave their support to the company’s latest payout plan, which allots more money to a group including Goldman Sachs Group Inc. (GS) and less to bondholders including Paulson & Co. The two rival groups signed onto the revised plan after battling to control the largest corporate liquidation in U.S. history.
Centerbridge made its filing “to advise the court that despite the purported consensus supporting the debtors’ plan, Centerbridge and it believes numerous other creditors do not believe that the new plan is confirmable” and will be opposing the confirmation, the hedge fund said.
Lehman Chief Executive Officer Bryan Marsal didn’t immediately respond to an e-mail seeking comment. Spokeswoman Kimberly Macleod declined to comment.
‘Horse Trading’
Lehman’s compromise proposal was “a product of horse trading” among investors who were noisiest in objecting to the defunct firm’s earlier payout formulas, Centerbridge said in its filing. To win them over, Lehman was “siphoning value away from other creditors,” Centerbridge said.
Holders of claims against Lehman’s commercial paper unit were among the losers being forced to subsidize noisier creditors, according to Centerbridge. The hedge fund said it had Lehman’s permission to conduct research on these issues.
Lehman aims to confirm its plan this year and start distributing a “significant” amount of its $21 billion in available cash shortly after, Lehman lawyer Lori Fife told Bloomberg on July 1.
Once the world’s fourth-biggest investment bank, Lehman filed for bankruptcy on Sept. 15, 2008, with assets of $ 639 billion.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.
