Lehman Brothers Foresee End To Record Bankruptcy

Lehman Brothers Holdings Inc., which filed the biggest bankruptcy in US history in September 2008, could now have enough support from its creditors to implement its latest payout plan that would finally allow the company to lift itself out of the doldrums of bankruptcy, said a top Lehman executive on Wednesday.

Lehman Brothers Holdings Inc., which filed the biggest bankruptcy in US history in September 2008, could now have enough support from its creditors to implement its latest payout plan that would finally allow the company to lift itself out of the doldrums of bankruptcy, said a top Lehman executive on Wednesday.

[quote]“We’re pretty optimistic about getting the support needed for the plan,” said Lehman’s head of international operations Daniel Ehrmann in a phone interview with Bloomberg Businessweek. “We are not aware of any entity or class of creditors where we’ll have a large enough objection to veto approval of our plan.”[/quote]

Lori Fife, a partner at Weil Gotshal & Manges and Lehman’s lead bankruptcy lawyer, added in an interview with Reuters, “we believe, right now, that we have enough support to confirm a plan…We hope it will get confirmed by the end of the year, and we hope to make distributions early next year.”

According to Ehrmann, the company is proposing a $65 billion liquidation plan that will enable it to pay off about $370 billion in claims. Since July this year, Lehman has speeding up its efforts to reach settlement agreements with its creditors, after spending the last three years caught up in disputes over Chapter 11 proceedings.

In its latest court filing for the Chapter 11 proceedings, the company announced that it had locked up nine new, major settlement agreements with its creditors that included affiliates such as Lehman Brothers International (Europe) and outside creditors such as Deutsche Bundesbank.

The creditors have until November 4^th to vote on the plan though Ehrmann is confident that there will be little to no resistance. Only one key affiliate hasn’t settled, and its vote isn’t needed, said Ehrmann, adding that creditors would be receiving about 14 cents on the dollar for their claims, and in some cases almost 16 cents.

[quote]“The rapidly growing level of support for our plan demonstrates that our creditors understand the logic of the economic compromise we have proposed,” said Lehman Chief Executive Officer Bryan Marsal in a statement to the press. “We met with our creditors frequently, listened and responded to their concerns, and structured the plan accordingly.”[/quote]

Once the world’s fourth largest investment bank, Lehman filed for bankruptcy with almost $613 billion in debt. The company has been engaged in a long legal battle with its creditors over repayment, and has paid out more than $1.4 billion in legal fees since filing for bankruptcy in 2008.