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Lehman 3/28
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Lehman to Pay Out Additional $1.6 Billion to Creditors
Mar 25, 2016 | The Wall Street Journal
By Patrick Fitzgerald
The team winding down Lehman Brothers Holdings Inc. said Thursday it would be paying $1.6 billion to creditors next week, more than seven-and-a-half years after the investment bank’s collapse triggered the financial crisis. -
Lehman Creditors Pick Up Another $1.6B Payout
Mar 25, 2016 | Law260
By Pete Brush
The Lehman Brothers Holdings Inc. bankruptcy administrator said Thursday that a coming $1.6 billion distribution to creditors would bring its total payout to $106.9 billion, a recovery for general unsecured creditors that exceeds estimates before a $1.5 billion settlement with JPMorgan is factored in. -
Panel Dismisses Minority Investor's Suit Against Lehman Entity
Mar 28, 2016 | New York Law Journal
By Ben Bedell,
A minority investor's suit against a partnership once controlled by the bankrupt Wall Street company Lehman Brothers has been dismissed by the Appellate Division, First Department. -
Review: Erin Callan puts nail in Lehman coffin
Mar 25, 2016 | Reuters
By Antony Currie
A legion of reasons, guesses and conspiracy theories keep circulating about why Lehman Brothers failed in 2008. This week, previously unreported incidents emerged that should forever keep the blame squarely focused on poor management by Chief Executive Dick Fuld and his long-time lieutenant Joe Gregory.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
1.6 Billion Distribution to Creditors
Cambridge Capital Real Estate Investments
Erin Callan Memoir
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Lehman to Pay Out Additional $1.6 Billion to Creditors
Mar 25, 2016 | The Wall Street Journal
By Patrick Fitzgerald
The team winding down Lehman Brothers Holdings Inc. said Thursday it would be paying $1.6 billion to creditors next week, more than seven-and-a-half years after the investment bank’s collapse triggered the financial crisis.
The payout, the ninth since the investment failed, will bring the total payout in the firm’s bankruptcy to approximately $106.9 billion. The bulk of the cash—$78.5 billion—has gone to pay so-called third-party, or non-Lehman claims.
Most the latest payout, some $1.3 billion, is also earmarked for non-Lehman creditors and is slated to be made March 31.
In a filing Thursday in U.S. Bankruptcy Court in New York, Lehman, which is in liquidation, said its general unsecured creditors, who were estimated to receive less than 20 cents on the dollar when Lehman’s bankruptcy plan went into effect in early 2012, will have received more than $100 billion, or more than 35 cents on the dollar, after the next distribution is completed.
The chapter 11 payment plan for Lehman treats similarly situated creditors of its subsidiaries better than those of the parent. General unsecured creditors of Lehman’s commodities unit, for example, will have received about 77 cents on the dollar following the latest distribution.
Those holding bonds issued by Lehman Brothers’ parent company have now recovered more than 37 cents on the dollar, up from an estimated 21.1 cents when Lehman’s plan went into effect in 2012.
The boost in recoveries, Lehman has previously said, has come from gains in the estate’s real-estate, derivatives and private-equity investments.
Lehman, once the nation’s fourth-largest investment bank, collapsed into the largest bankruptcy ever in September 2008 and its U.S. brokerage business was quickly sold off to Barclays PLC.
After the bank failed, some creditors bailed out, not wanting to wait for their money or to take a chance they wouldn’t get paid at all. Hedge funds were willing buyers of their claims at steep discount, betting they would gain in value after the initial panic subsided.
That bet has become quite fruitful. Since the bankruptcy, Lehman has consistently increased estimates of how much creditors would get back, helping hedge-fund managers such as Paulson & Co. and Elliott Management Corp. rake in profits...
For full story: http://www.wsj.com/articles/lehman-to-pay-out-additional-1-6-billion-to-creditors-1458917202
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Lehman Creditors Pick Up Another $1.6B Payout
Mar 25, 2016 | Law260
By Pete Brush
The Lehman Brothers Holdings Inc. bankruptcy administrator said Thursday that a coming $1.6 billion distribution to creditors would bring its total payout to $106.9 billion, a recovery for general unsecured creditors that exceeds estimates before a $1.5 billion settlement with JPMorgan is factored in.
The distribution, to be paid March 31, is the ninth since confirmation of the fallen financial giant's Chapter 11 plan in December 2011, according to a court filing.
"Lehman’s total distributions to unsecured creditors will amount to approximately $106.9 billion including $78.5 billion of payments on account of third-party claims, which includes non-controlled affiliate claims and $28.5 billion of payments among the Lehman debtors and their controlled affiliates," claims agent Epiq Systems Inc. said.
At that time of plan confirmation, general unsecured creditors were said to be in line to ultimately receive about 20 cents on the dollar. Epiq now confirms that they have recovered well over 30 cents on the dollar. The increased recovery has been attributed to a favorable economic environment and concomitant gains in value for assets controlled by the bankruptcy estate.
Not included in the latest payout is a recent settlement between JPMorgan Chase Bank NAand Lehman that ends the estate's lawsuit against the megabank over an alleged $8.6 billion worth of unlawful per-bankruptcy transfers. That settlement includes a $1.42 billion cash infusion into the estate and the release of a deposit valued at $76 million.
The settlement agreement resolves claims in an avoidance action against JPMorgan for fraudulent conveyance, breach of contract, coercion and duress. It did not end additional claims over JPMorgan’s role as the main clearing bank for Lehman’s broker-dealer business and other disputes over cash distributions....For full story: http://www.law360.com/articles/776295/lehman-creditors-pick-up-another-1-6b-payout
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Panel Dismisses Minority Investor's Suit Against Lehman Entity
Mar 28, 2016 | New York Law Journal
By Ben Bedell,
A minority investor's suit against a partnership once controlled by the bankrupt Wall Street company Lehman Brothers has been dismissed by the Appellate Division, First Department.
The panel found the plaintiff, Cambridge Capital Real Estate Investments, which lost its entire $20 million investment, "fail[ed] to allege facts demonstrating the absence of fairness, or that it did not receive the substantial equivalent in value of what it had before" Archstone Enterprise, the Lehman-controlled entity, sold its real estate portfolio for $16 billion in 2012.
Cambridge claimed Archstone, which did not go through bankruptcy with Lehman but remained controlled by its creditors, should have waited for a better offer.
Since the officers controlling Archstone were compensated partly based on how quickly they could sell assets and pay off Lehman's creditors, Cambridge argued they were not disinterested and had breached their fiduciary duty to minority investors.
Applying Delaware law in Cambridge Capital Real Estate Investments v. Archstone Enterprise, 654471/12, the panel rejected the claim, saying Cambridge "identifies no alternative transactions, let alone one that would have achieved more value" for Archstone's investors.
"Fiduciaries are not required to abandon a transaction simply because a better deal might have become available in the future," the panel said in an unsigned opinion, citing McGowan v. Ferro, 859 A2d 1012, 1035 (Del Ch 2004), affd 873 A2d 1099 Del 2005).
Cambridge is an investment vehicle controlled by Paul and David Merage, the inventors of the "Hot Pockets" snacks, who sold their company to Nestle in 2002 for $2.6 billion.
They bought a small share in Archstone in October 2007, then one of the largest multi-family real estate investment trusts in the world, when real estate prices were peaking.
Archstone's investors, led by Lehman, refinanced the entity in 2010, creating two classes of stock, preferred and common. Cambridge alleged it was not notified of the pending transaction, and that its consent was required, since a substitute partnership agreement materially reduced its rights and left it with common stock that would have no value if sale proceeds were insufficient to return the capital invested by the preferred class.
Lehman subsequently bought out the other preferred investors.
Commercial Division Justice Marcy Friedman had ruled claims related to that transaction were time-barred....
For full story: http://www.newyorklawjournal.com/home/id=1202753222375/Panel-Dismisses-Minority-Investors-Suit-Against-Lehman-Entity?mcode=1202617075062&curindex=2&slreturn=20160228042043
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Review: Erin Callan puts nail in Lehman coffin
Mar 25, 2016 | Reuters
By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
A legion of reasons, guesses and conspiracy theories keep circulating about why Lehman Brothers failed in 2008. This week, previously unreported incidents emerged that should forever keep the blame squarely focused on poor management by Chief Executive Dick Fuld and his long-time lieutenant Joe Gregory. Erin Callan is the one to thank. She has finally published a memoir, “Full Circle,” almost eight years after the ignominious end to her short but high-profile tenure as the investment bank’s finance chief.
According to Callan, Fuld at one point took her aside to tell her “he felt I had a tendency to be too hard on the other, all-male, members of the Lehman executive committee. My interrogatory style could be off-putting and challenging.” In a separate chat, Gregory informed her that she’s the only one in executive committee meetings “whose legs are showing … that some of my clothes were too provocative. So much so that he felt that some of my colleagues were distracted.”
This is early 2008. Real estate prices are falling fast. Shareholders are getting increasingly worried about how much dross Lehman may have amassed on its balance sheet, a message many of them are telling Callan directly as she introduces herself after starting in the role as chief financial officer. There had been plans to try to reduce the bank’s exposure, but nothing was getting done.
When Callan – now Erin Callan Montella – took over as CFO, the plan to get rid of some commercial real estate assets was “in the 18th draft,” as she told the Financial Crisis Inquiry Commission in an interview that was one of many made public earlier this month. She pushes her colleagues harder on the topic pretty much from the start, a claim Callan substantiated by emails obtained by both the commission and the bankruptcy court examiner’s report penned by Anton Valukas. As she says about Fuld’s accusation in her book, “I really wasn’t a hard-ass or rude, but I was direct and persistent.”
Her experience is quite different than that of then-Goldman Sachs CFO David Viniar. Various reports and investigations have already shown that when he started worrying about real estate assets a little over a year earlier, the Goldman brass got behind him and started selling. Callan, though, was smacked down by the kind of diversionary tactics that men rarely are forced to confront in the workplace. These episodes are even more galling when recalling Fuld’s nickname: the Gorilla, so-called for a penchant for punchy patter.
Callan was by no means the first Lehman executive to have her calls to action brushed off. Valukas’s report explains how risk management chief Madelyn Antoncic was pushed aside in September 2007 after repeatedly objecting to Fuld, Gregory and investment banking boss Skip McGee routinely waiving aside risk limits on all manner of deals. Valukas also sheds light on the fate of capital markets head Mike Gelband. He left a few months earlier after spending 18 months warning Fuld that mortgage markets especially were overheating. The CEO at one point told Gelband he was “too conservative.”
For all this bad judgment, Callan nevertheless appears to be the only one who had the sexist card played against her – and at precisely the moment her persistence was most needed.
What’s curious about “Full Circle,” however, compared to the litany of other crisis recollection tomes is that this one minimizes efforts to defend actions or to interpret – or reinterpret – what others are doing. Her time as CFO occupies at most a third of the book. She is not overly interested in laying blame elsewhere, either. There are a couple of exceptions: she makes clear that she was not fired, but resigned, and that as CFO she was barely more than a mouthpiece for decisions that had been made by others, at times years before. Even then, the finger-pointing is half-hearted....
For full story: http://blogs.reuters.com/breakingviews/2016/03/25/review-erin-callan-puts-nail-in-lehman-coffin/
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
1.6 Billion Distribution to Creditors
Cambridge Capital Real Estate Investments
Erin Callan Memoir
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