Lehman's U.S. brokerage finalises settlements

NEW YORK Wed Feb 27, 2013 3:09am IST

The Lehman Brothers booth on the trading floor of the New York Stock Exchange, is shown in this September 16, 2008 file photo. REUTERS/Brendan McDermid/Files

The Lehman Brothers booth on the trading floor of the New York Stock Exchange, is shown in this September 16, 2008 file photo.

Credit: Reuters/Brendan McDermid/Files

Related Topics

Stocks

   

NEW YORK (Reuters) - Lehman Brothers'(LEM.MX) U.S. brokerage on Tuesday finalized settlements with the former financial giant's parent and European entities, resolving nearly $44 billion in customer claims and paving the way for full repayment to the brokerage's former customers.

Though deals were initially announced last year, details were ironed out and revealed in court papers and statements by the parties on Tuesday. Lehman's parent will be allowed a $2.3 billion customer claim against the brokerage, down from the $19.9 billion it had initially sought, papers show.

Lehman's European unit will receive a $9 billion customer claim, reduced from the $24 billion originally asserted.

The parent will also receive $14 billion in lower-priority unsecured claims against the brokerage, while the European arm will get a $4 billion unsecured claim.

Lehman and several affiliates filed the largest-ever U.S. bankruptcy on September 15, 2008, with $639 billion in assets.

The intercompany claims had been the final key disputes keeping the trustee who is liquidating Lehman's brokerage, James Giddens, from making full payouts to customers.

The settlements should allow for full payout, Giddens said in a statement on Tuesday. Leftover money would be paid to other classes of unsecured creditors, though it remains unclear how much they could receive.

Giddens called the four-year negotiations "arduous."

"We are delighted that these agreements have been reached," he said in the statement.

The deals are subject to approval by U.S. Bankruptcy Court in Manhattan; a hearing is set for April 16. The European unit's settlement needs approval by an English court.

Daniel Ehrmann, co-head of derivatives for the Lehman parent, said the deal "avoids costly and extensive litigation, and contributes significantly to recoveries for" the parent's creditors.

Lehman is in the midst of repaying about $65 billion to creditors of its parent and other subsidiaries under a liquidation plan approved in late 2011.

Tony Lomas, one of the administrators liquidating Lehman's European unit, called that unit's settlement a "defining transaction" that resolves "the most complex inter-affiliate" dispute in Lehman's insolvency.

The U.S. brokerage will keep $777 million in reserve as it continues to litigate legal claims from Barclays (BARC.L) over that company's purchase of the brokerage's assets in 2008, according to court papers.

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

The brokerage liquidation is In re Lehman Brothers Inc, in the same court, No. 08-1420.

(Reporting By Nick Brown; Editing by Leslie Adler)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared
People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro Q4 net profit beats estimates, rises 29 percent

Wipro posted a 29 percent rise in its fourth-quarter net profit, beating expectations, helped by increased IT spending by its customers. For the quarter ended March 31, the company said it earned 22.27 billion rupees compared with 17.29 billion rupees a year earlier.  Full Article | Full Coverage 

REUTERS SHOWCASE

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Read | Full Coverage 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Insider Trading Case

Insider Trading Case

Ex-Goldman director Rajat Gupta to surrender June 17 in insider case.  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage