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Lehman equity holder requests official committee representation
By Caroline Salls
Pittsburgh, Sept. 23 - Lehman Brothers Holdings, Inc. equity security holder Greg Georgas asked the U.S. Bankruptcy Court for the Southern District of New York to appoint an official committee of equity security holders for the company's Chapter 11 bankruptcy case, according to a Tuesday court filing.
Georgas said the equity committee should be comprised of individuals and institutions that own common or preferred stock in order to assure adequate representation of equity security holders and the orderly and proper administration of Lehman's estate.
In addition, Georgas said appointment of the committee is justified by:
• Lehman's announcement that its total shareholder equity was up to $28.4 billion from $26.3 billion in the third quarter;
• The fact that the company should be able to participate in a proposed $700 billion bailout designed to prevent further losses in the residential mortgage-related markets, which means Lehman should be able to return to future profitable operations, leaving value for equity recovery; and
• The company's Sept. 10 announcement that it had an estimated liquidity pool of $42 billion. Since the company said at a Sept. 19 hearing that it had little remaining cash, Georgas said an investigation should be conducted by an equity committee.
According to the motion, an official committee of unsecured creditors cannot be expected to protect the shareholders' equity.
New York-based Lehman Brothers Holdings is the fourth largest investment bank in the United States. The company filed for bankruptcy on Sept. 15. Its Chapter 11 case number is 08-13555.
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