How Lehman emerged from Chapter 11

Author: | Published: 21 Mar 2012

Derivatives creditors of a Lehman Brothers Holdings (Lehman Brothers) subsidiary agreeing to a smaller share of distributions than they might have recovered through litigation paved the way for the bank’s landmark exit from Chapter 11 bankruptcy.

LBHI emerged from bankruptcy protection on March 6 and is expected to return over $10 billion to creditors on April 17 in accordance with the reorganisation plan approved by a US bankruptcy court last year.

The actions of Lehman Brothers Special Financing (LBSF) derivative creditors will be key to the efficient and timely resolution of Lehman Brothers claims.

The Chapter 11 plan was a compromise between two earlier proposals: one filed by Lehman Brothers that would have creditors paid by the relevant Lehman counterparty; the other filed by Lehman Brothers creditors that would consolidate the assets of all...