UPDATE 4-Lehman sets payouts to exit bankruptcy

* Expects to repay unsecured creditors 15-27 pct of claims

* Sees notional value of claims over $1 trillion

* Certain secured creditors could be paid in full
(Recasts; adds more details from court filing)

April 15 (BestGrowthStock) – Lehman Brothers Holdings Inc (LEHMQ.PK: )
laid out a plan on Wednesday to repay creditors a portion of
some $1 trillion in expected claims, under a proposal that could
resolve the largest U.S. bankruptcy in history.

Lehman’s proposal in a disclosure statement to a U.S. court
was the first complete view of how it intended to exit the
historic bankruptcy case following its collapse during the
global financial crisis in September, 2008.

In its latest filing, it said its plan would “accelerate
recoveries to creditors and avoid the potential enormous costs”
of extended litigation over creditor issues.

Lehman estimates that the notional value of its creditors
claims will ultimately exceed $1 trillion, but it expects to
repay a much smaller amount, according to court documents.

Lehman’s unsecured creditors could recover between 15 and 27
percent of their claims while certain secured creditors could be
paid in full.

General unsecured creditors of Lehman’s parent company would
receive 14.7 percent while general unsecured creditors of Lehman
Brothers Special Financing unit, which holds many of its
derivatives positions, are expected to recover about 24
percent.

Unsecured creditors of Lehman’s Commodity Services unit
which holds commodities positions, could recover about 26.8
percent of their claims.

LAMCO

Lehman last month proposed creating a new company called
LAMCO to wind down its remaining assets and operations.
[ID:nN15219846]

LAMCO, which is currently searching for a strategic partner
or equity backer, would continue to manage Lehman’s private
equity investments, real estate assets, derivatives and other
long term assets.

It will seek approval to create that company at a hearing
later on Thursday in U.S. bankruptcy court in Manhattan. Lehman
estimated it has collected $8.8 billion on derivative contracts
and could recover an additional $5.4 billion on outstanding
contracts.

Lehman said it expected its real estate investments could
return an additional $11 billion through 2014 while its loans
could recover $7.2 billion and its private equity investments
could generate $9.6 billion.

Lehman’s real estate investments include the upmarket
Archstone apartment complexes in major U.S. cities, while its
private equity and investment interests include its retained
stake in its former Neuberger Berman wealth management unit,
which it sold earlier in the case.

Lehman said it would expect to recover $1 billion to $2
billion on a sale of its interests in its Aurora and Woodlands
bank units in the next year or two.

CHAPTER 7 SCENARIO

If Lehman’s reorganization plan is approved by the court, it
could soon be put to a vote by creditors.

However, Lehman said that if its plan is not approved it may
seek to put all of its creditors in a single repayment pool,
under a bankruptcy process called “substantive consolidation”,
or the case could be converted to a liquidating Chapter 7
bankruptcy run by a court-appointed trustee.

If Lehman were liquidated under a Chapter 7 bankruptcy
instead of using its current proposed plan, Lehman’s investment
bankers at Lazard estimated general unsecured creditors would
receive only 7 percent of their claims.

DELAYED DISCLOSURE STATEMENT

Lehman had delayed filing its disclosure statement for a
month because it said it wanted to include the details from a
report by Lehman’s court-appointed examiner in the disclosure
statement.

When it filed for bankruptcy, Lehman listed more than $600
billion of assets.

It quickly sold its biggest units like its core U.S.
brokerage and Neuberger Berman wealth management subsidiary, but
hundreds of Lehman employees hired by the bankruptcy estate have
been managing the company’s long-term investments in real estate
and private equity since the bankruptcy.

Banks which bought Lehman assets at the time of its collapse
reaped windfalls in an emergency auction, a court-appointed
examiner said. [ID:nN14179515]

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

Stock

(Reporting by Sakthi Prasad in Bangalore and Emily Chasan in
New York; Editing by David Cowell)

UPDATE 4-Lehman sets payouts to exit bankruptcy