Lehman seeks to void $43 bn creditor claims

Source :Reuters / New York May 19, 2010, 12:15 IST

Lehman Brothers Holdings Inc has asked a federal bankruptcy judge to void more than $43 billion of claims by creditors, as the collapsed investment bank tries to slash its obligations.

According to filings on Tuesday with the federal bankruptcy court in Manhattan, Lehman determined that most of the claims it believes should be disallowed have been amended or superseded by claims filed by the same creditors.


     

It said other claims, meanwhile, duplicate claims filed by the same creditors against the same Lehman entities, and on account of the same obligations.

"The debtors cannot be required to pay on the same claim more than once," wrote Shai Waisman, a partner at Weil, Gotshal & Manges LLP, who represents Lehman.

A hearing on Lehman's request is scheduled for June 29.

Lehman filed for Chapter 11 protection from creditors on Sept. 15, 2008, in the largest bankruptcy in U.S. history.

In March, Lehman said creditors' claims should be reduced to $605 billion, and that allowed claims might ultimately decline to $260 billion.

The case is In re: Lehman Brothers Holdings Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

The inside scoop on Lehman's collapse

Source: Reuters Apr 02 2010 , Boston
 A literary genre to emerge from the financial crisis is the Big Bank Biography,
led by "The Partnership," Charles Ellis' history of Goldman Sachs, and several tales of the end of Bear Stearns & Co.

Add to this list Vicky Ward's "The Devil's Casino," an inside account of the egos and rivalries that guided Lehman Brothers from the 1980s to its catastrophic end in 2008. The story couldn't be more timely, coming as investigations allege gory new details of its fall such as how top executives hid borrowing.

Ward's book is rich on details, like CEO Dick Fuld's aversion to Casual Friday (the end of Western Civilization, as he saw it) but almost empty on the firm's storied first 100 years. As Ward, a contributing editor at Vanity Fair, explains, that story has been told elsewhere.

Her book takes off from 50 pages of an official history that was commissioned by the firm in 2003.

The pages were never published because so many executives painted negative portraits of Fuld and offered so many disparate accounts that the firm's own writers could not weave a clean tale for public consumption.

They got that one right. In Ward's hands, the notes become a gold mine of gossip and the basis for further revealing interviews. Affairs poison friendships. Money changes priorities. And the wives of top executives gripe how hard it was to pack for a retreat featuring hiking by day and fancy dinners by night.

There are tales to admire as well: the firm comes alive on Sept. 11, 2001, when it lost only one of the hundreds of its employees at the World Trade Centre, then brings itself back into operation days later because technicians had carried crucial servers down many flights of stairs out of the doomed building.

Fuld often emerges in the book as a sympathetic character, committed to his family and to various charities, and, like a good chief executive, at pains to mend feuds.

But when Ward connects the dots, the rough conclusion she comes up with is that fatal flaws of Fuld's culture brought Lehman down. Briefly: his ambition to match Goldman Sachs and other firms led Lehman to pile on too much risk, such as the mortgage-backed securities that ultimately proved fatal.

The problem with this analysis is that Lehman's fall does not lend itself to a cultural explanation alone. It is also a story of a firm allowed to become too big to fail by regulators navigating uncharted waters.

And, despite speaking with nearly all the central players and getting terrific details of the desperate, last-ditch negotiations to save Lehman, she lacks several key accounts including that of Fuld himself, who is hamstrung by lawsuits.

This is the limit of the Big Bank Biography: without subpoena power, the full picture is out of reach.

No matter how good the gossip, top executives are also actors in a wider financial system, and the inside story can only explain so much.

JPMorgan, Citi and the destruction of Lehman Brothers

March 12, 2010

JPMorgan and Citigroup helped cause the collapse 
of Lehman Brothers by demanding more collateral and changing guarantee agreements, the bankrupt bank’s examiner says.

The court-appointed examiner also said in a 2200-page report published overnight that Lehman used accounting gimmicks and had been insolvent for weeks before it filed for bankruptcy in September 2008.

“The demands for collateral by Lehman’s lenders had direct impact on Lehman’s liquidity pool,” said Anton Valukas, the US Trustee-appointed examiner, in the report filed in Manhattan federal court. “Lehman’s available liquidity is central to the question of why Lehman failed.”

Former Lehman chief executive Richard Fuld, former chief financial officer Erin Callan, former executive vice-president Ian Lowitt and former managing director Christopher O’Meara certified misleading statements, the report said.

Mr Fuld was “at least grossly negligent,” the report said. Lehman collapsed with $US639 billion in assets, the biggest bankruptcy in US history.

Commenting on Barclays’ purchase of Lehman’s North American brokerage, Mr Valukas said a “limited amount of assets” belonging to Lehman were “improperly transferred to Barclays.”

The examiner said that while some of Lehman's management's decisions "can be questioned in retrospect" and the firm's valuation procedures for its assets "may have been wanting," those responsible for the firm had used their business judgment and were largely not liable for the firm's collapse.

He did not find that Lehman's directors had explicitly violated their fiduciary duty.

However, in the report the examiner also revealed explosive allegations about a gimmick, known as "Repo 105," that was used for the sole purpose of manipulating Lehman's books.

The examiner concluded that the gimmick, which dated back to 2001 and was used without telling investors or regulators, gave the appearance that Lehman was reducing its overall leverage levels in 2008 when in reality it was not, partially leading to its collapse.

The examiner said there was also sufficient evidence to support a possible claim that the firm's auditor Ernst & Young had been "negligent."

Barclays and JPMorgan declined to comment and a Citi representative had no immediate comment. A spokesman for Ernst & Young did not comment, saying the firm had not yet had time to review the findings.

The report was completed in February and was allowed to be unsealed by the bankruptcy judge overseeing the case earlier on Thursday.

Lehman Europe to repay $11 bn to clients

London December 30, 2009, 17:29 IST

The administrators of the European operations of the failed Lehman Brothers will return assets worth over $11 billion to the investors.

More than 90 per cent of the affected investors at Lehman Brothers International Europe are in support of the plan to return the assets.



PricewaterhouseCoopers (PwC)-- whose partners are the administrators -- today said it got the support of over 90 per cent clients for the claim resolution agreement (CRA).


The CRA, a multilateral contract between Lehman Brothers Europe and its clients, governs the basis on which assets can be returned.


"Under these arrangements, the administrators expect to return over $11 billion of the client assets," PwC said in a statement.


Lehman Brothers Europe had some $32 billion of client assets as on September 15, 2008 -- the day, when its American parent firm Lehman Brothers filed for bankruptcy in the US. Since that date, $13.3 billion has been returned.


According to the statement, the agreement allows the failed financial titan to distribute the remaining trust property during 2010.


The collapse of the famed Lehman Brothers had worsened the financial turmoil in the US which pushed the global economy into a tizzy.