Lehman June 15

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Undisputed Claims

1. The Billion-Dollar Battles Still Looming In Lehman

   Jun 12, 2015 | Law360

   By Jonathan Randles
   
   
   As the eighth anniversary of the Lehman Brothers Holdings Inc. bankruptcy approaches, administrators overseeing the resolution of the failed investment bank's affairs are gearing up for what could prove to be the most contentious battles to date with creditors over billions in assets.

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Client Attorney Privileged/Attorney Work Product/At Request of Counsel

Undisputed Claims

1. The Billion-Dollar Battles Still Looming In Lehman

   Jun 12, 2015 | Law360

   By Jonathan Randles

   As the eighth anniversary of the Lehman Brothers Holdings Inc. bankruptcy approaches, administrators overseeing the resolution of the failed investment bank's affairs are gearing up for what could prove to be the most contentious battles to date with creditors over billions in assets.

   Approximately 2,400 disputed claims seeking more than $68 billion from Lehman remain unresolved. The claims, brought by major banks, private equity firms and other parties, cover a breadth of complex issues that are likely going to need to be resolved through litigation, Lehman Chief General Counsel Matthew Cantor said during a hearing in New York bankruptcy court Tuesday.
   
   “We expect that remaining dispute resolution will require a very significant amount of court time, resources and attention,” said a presentation Cantor gave to U.S. Bankruptcy Judge Shelley Chapman, who is overseeing the Lehman case.
   
   Despite progress that has been made since Lehman's bankruptcy was confirmed in December 2011, winding down the bank's affairs will take several more years. Here are some of the biggest legal battles that still need to be fought before the Lehman bankruptcy, the largest in U.S. history, concludes.
   
   Bank Litigation
   
   Among the biggest matters in need of resolution is litigation over derivative trades and securities involving JPMorgan Chase Bank NA, Citibank NA and Credit Suisse AG. Taken together, the three cases concern more than 125,000 trades and several billion dollars worth of outstanding claims against Lehman, according to Cantor.
   
   Although Lehman was able to resolve similar derivative disputes with 10 of its 13 largest banks in 2011, the cases involving Citi and JPMorgan are more complex because both of those banks received billions of dollars from Lehman in the months leading up to its collapse. If the cases aren't resolved, Lehman could be looking at three “simultaneous massive trials” with the three banks, Cantor's presentation said.
   
   JPMorgan is seeking $2.3 billion, Citi seeks more than $2 billion and Credit Suisse has filed claims seeking approximately $1.2 billion. Lehman claims that the banks' claims were either calculated incorrectly or inflated.
   
   “These are extremely complicated litigations that touch every aspect of the complex web of dealings between Lehman and its biggest banks — they also include complex bankruptcy issues such as setoff and post-petition interest,” Cantor said.
   
   Dispositive motions in the JPMorgan and Citi cases are expected to be filed in summer and early fall of 2016 and in the beginning of 2017 in the Credit Suisse case.
   
   Guarantee Claims
   
   The largest remaining pool of unresolved claims against Lehman are so-called guarantee claims tied to the investment bank's agreement to cover certain obligations for its foreign subsidiary Lehman Brothers International (Europe).
   
   Approximately 1,150 disputed guaranteed claims are held by entities located in 46 countries. Some of these entities assert that their claims are worth hundreds of millions of dollars. SRM Global Master Fund Ltd. has asserted claims for more than $305 million, and UBS AG has asserted claims for more than $127 million.
   
   Lehman filed a motion on Wednesday seeking to shield itself from potential liability tied to these claims, saying that the amounts will be fully covered, plus interest in proceedings involving LBIE in the United Kingdom.
   
   The motion asks Judge Chapman to value the investors' claims against Lehman at $0, which would shield it from paying them off. Lehman argues that if it were required to pay any amount on these claims, LBIE creditors “would receive more than a single satisfaction of their claims,” which is unlawful.
   
   If Lehman's request is granted, it would allow the estate to free up $4.3 billion it has been holding in reserve. Granting the request would also speed up resolution of the bankruptcy, Lehman said, because it would let the estate avoid having to engage in substantial discovery investigating the merits of the creditors' claims.
   
   Mortgage-Backed Security Claims
   
   Lehman has set away another $5 billion to cover the potential costs of claims over bogus mortgage loan securities. These residential mortgage-backed security claims, or RMBS claims, are held by 405 trusts and "likely will require a significant amount of judicial resources to resolve," Cantor said in his presentation.
   
   The trustees originally sought $37 billion in put-back claims from the estate, although two onetime co-claimants eventually split off their disputes from the rest of the group. The claims asserted that Lehman misrepresented the quality of hundreds of thousands of mortgage loans that were then repackaged and sold into the trusts.
   
   Last year, the trustees had sought to boost Lehman's reserve to $7.1 billion, which the estate fought...

   For full story:

   http://www.law360.com/articles/667260/the-billion-dollar-battles-still-looming-in-lehman
   

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