Lehman Commercial Paper files first-day motions in connection with Chapter 11 filing

By Jennifer Lanning Drey

Portland, Ore., Oct. 6 - Lehman Commercial Paper Inc. filed for Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the Southern District of New York, according to court documents.

In conjunction with the Chapter 11 filing, Lehman Commercial Paper also filed a series of first-day motions.

Among the first-day motions, Lehman requested authority to continue to fulfill its obligations as administrative agent. According to the motion, the company currently serves as administrative agent of several hundred loans.

In order to remain serving as administrative agent, Lehman said it must be able to provide both borrowers and syndicate members with concrete assurance that it will have unfettered access to funds in the bank account used in connection with the administration of the agency business.

Additionally, the company asked the court to allow it to terminate and transfer its administrative agency relationships.

Lehman Commercial Paper said it had sought to sell the agency positions but was unable to do so.

The company believes it is in its best interest to transfer or resign from its administrative agency positions in order to limit any further liability arising from the role.

Lehman Commercial Paper also said the fees generated from the positions do not cover the administrative expense of operating the business and, accordingly, it does not believe they represent an asset.

Also in the first-day motions filing, Lehman Commercial Paper asked to continue elevating participations. The company said it is party to more than 500 participations or sub-participations where it acts solely as an intermediary, and the true parties in interest would like to eliminate Lehman Commercial Paper as the go-between.

Lehman Commercial Paper said it has billions of dollars in unfunded loan commitments, representing potential liabilities of its estate. The company said that elevation would relieve it from these potential liabilities.

Lehman Commercial Paper is a wholly owned subsidiary of Lehman ALI Inc., which is a direct subsidiary of Lehman Brothers Holdings, Inc. Lehman Commercial Paper engages in the origination, administration and trading of unsecured loans and loans secured by mortgage loans and other assets.

Lehman Commercial Paper filed for Chapter 11 bankruptcy on Oct. 5 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 08-13900.

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