Lehman Brothers Holdings Inc., Lehman Brothers Inc. And Lehman Brothers International (Europe) Resolve Intercompany Claims
Milestone Agreements Resolve Billions in Intercompany Claims
Clears Path for Additional Distributions to LBI and LBIE Customers and LBHI Creditors
NEW YORK and LONDON, Feb. 26, 2013 /PRNewswire-USNewswire/ -- The Trustee for Lehman Brothers Inc. ("LBI"), Lehman Brothers Holdings Inc. and certain of its debtor and non-debtor subsidiaries ("LBHI"), and the Joint Administrators of Lehman Brothers International (Europe) ("LBIE") have entered into two separate agreements settling all intercompany claims between LBI on the one part, and LBHI and LBIE on the other part. The LBI Trustee today filed motions seeking approval of the agreements with the U.S. Bankruptcy Court.
These separate agreements settle billions of dollars of complex intercompany claims and liabilities between the parties. The settlement agreements also provide a final resolution of all legal and factual issues regarding intercompany relationships between LBI and LBHI and between LBI and LBIE, avoiding the need for costly litigation. The settlement agreements, along with a number of related motions, are subject to approval by the U.S. Bankruptcy Judge in the LBI Securities Investor Protection Act (SIPA) proceeding, the Honorable James M. Peck, and in the case of the agreement between LBI and LBIE, an order of the English High Court.
Upon approval, the settlements will allow LBI's Trustee to proceed with plans to allocate and distribute sufficient cash and securities to LBI's customer claimants, including LBHI and LBIE, to enable the LBI Trustee to satisfy valid customer claims in full. This is a critical step in obtaining significant value to return to LBIE's counterparties included in its Omnibus Claim and to LBHI's creditors.
As part of the resolution, the parties have also agreed to a protocol for the settlement of claims remaining against the LBI estate as the Trustee focuses on liquidating remaining assets and the allowance of general estate claims. Pursuant to the protocol following court approvals, the Trustee will file periodic, public reports regarding the general estate with the Bankruptcy Court.
James Giddens, Trustee for the liquidation of LBI, said: "After more than four years of arduous negotiations involving the analysis of hundreds of thousands of transactions with unique legal challenges, on behalf of myself and the hundreds of professionals involved, we are delighted that these agreements have been reached. We are also grateful to SIPC and the SEC for their assistance in these matters. If judicially approved and implemented, securities customers should receive full satisfaction of their claims and distributions from the general estate will be facilitated."
Daniel Ehrmann, LBHI's head of international operations and co-head of derivatives, said: "This milestone agreement with LBI resolves billions of dollars of complex intercompany claims, provides LBHI and its affiliates more than $2.3 billion in customer claims and $14 billion in general unsecured claims, avoids costly and extensive litigation, and contributes significantly to recoveries for LBHI's creditors. Today's settlement represents an enormous effort over many years by multiple dedicated professionals and powerfully underscores the benefits of reaching a consensual settlement rather than pursuing litigation. The settlement, consistent with the views of the global creditor base, will enable LBHI to accelerate distributions to creditors with allowed claims."
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