Lehman Still Has Billions in Assets and Unresolved Claims
Joseph Checkler
June 10, 2015
(c) 2015 Dow Jones & Company, Inc.
Lehman Brothers Holdings Inc . is winding down is business, but its bankruptcy case remains a massive undertaking. And it has the numbers to prove it.
Nearly seven years after collapsing, Lehman still has $15 billion in assets and $68 billion in claims to resolve. The failed investment bank said in a filing it is now focusing its attention on litigation and contested claims that have yet to be settled.
"The wind-down is entering a phase during which increasingly more court resources will be required to advance the process and provide final resolution and distributions to creditors," Lehman said in its annual "state of the estate" filing made with the U.S. Bankruptcy Court in New York on Tuesday.
Lehman's patience in selling off assets over time instead of at bargain basement prices at the height of the financial crisis has been a boon to unsecured creditors, who have received far more for their claims than originally expected.
When a judge approved the bank's liquidation plan in December 2011, Lehman conservatively estimated that creditors would recover at least $65 billion. However, thanks to a string of settlements and rebounding markets, Lehman creditors have now received around $100 billion, including money that flowed between Lehman's own affiliates.
Since its last presentation to the court in February 2014, Lehman said it has resolved $74 billion in claims, including a $350 million claim tied to properties in London's Canary Wharf financial district and a series of claims related to the New York Giants football club.
Still, [color=red]much remains unresolved. Lehman has outstanding disputes with three large banks--- Citigroup Inc ., J.P. Morgan Chase & Co . and Credit Suisse Group AG ---over derivatives and other securities transactions.
"These cases have and will require an enormous amount of resources to resolve," Lehman said in its filing, pointing out that the disputes involve more than 125,000 individual trades.
Lehman, in a separate filing made Wednesday, asked a bankruptcy judge to estimate its liability for some $7.9 billion in claims from creditors of its European arm, Lehman Brothers International Europe, at zero.
Lehman argues that holders of those claims have already been paid in full by LBIE, and therefore would be receiving more than 100% recovery. Lehman said if that request is approved, it would free up a portion of the $4.3 billion being held in a reserve account, money that would go to other creditors.
Lehman, once the nation's fourth-largest investment bank, collapsed into the largest bankruptcy ever in September 2008.
Since emerging from chapter 11 in early 2012, the failed bank has been making settlements with its counterparties and in turn distributing money to creditors.
As Tuesday's filing showed, Lehman is still expected to exist in some form for several more years.
The bank's brokerage arm, which was sold to Barclays PLC just days after the bankruptcy filing, is being unwound by trustee James W. Giddens in accordance with the Securities Investor Protection Act. Creditors and customers of the brokerage, which technically isn't in bankruptcy but is overseen by Lehman's bankruptcy judge, have already received about $112 billion.
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