Lehman seeks approval of agreements that pave way for $34.8 million receivables sale

By Caroline Salls

Pittsburgh, Jan. 28 - Lehman Brothers Holdings, Inc. requested court approval of two agreements that will allow Lehman Commercial Paper Inc. to sell the receivables of Lehman indirect non-debtor subsidiary LBT Varlik Yonetim Anonim Sirketi to Vector Holdings Sarl, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, LBT's assets include an asset management license, a non-performing loan portfolio with a book value of $66.2 million and a cash balance of roughly $2.6 million.

LBT's liabilities include $69.4 million in debt under two loan agreements with Lehman Brothers Bankhaus AG, which is another indirect, non-debtor subsidiary of Lehman Brothers Holdings that was placed in insolvency on Nov. 13.

Shortly after Lehman's bankruptcy filing, the company said it realized that LBT's ability to repay amounts owed to Lehman Commercial paper under the loan agreements was uncertain.

As a result, Lehman explored options to improve LBT's financial situation and preserve Lehman Commercial Paper's interest in related receivables.

Lehman said it ultimately decided that a $34.8 million purchase offer from Vector would provide the greatest recovery for Lehman Commercial Paper's estates and creditors.

However, the receivables sale is conditioned on the concurrent completion of Bankhaus' assignment to Lehman Commercial Paper of any interest that Bankhaus may hold in the receivables, as well as the sale of equity interests in LBT to Vector under a Jan. 9 share sale and purchase agreement.

As a result, Lehman is seeking court approval of the agreement that would assign Bankhaus' interest in the receivables in exchange for Lehman Commercial Paper's payment of 50% of the total consideration due under the assignment agreement between Lehman Commercial Paper and Vector.

In addition, Lehman is seeking court approval of the proposed $34.8 million sale of the receivables to Vector.

A hearing is scheduled for Feb. 25.

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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