Lehman to establish new management unit under reorganization plan

By Caroline Salls

Pittsburgh, March 15 - Lehman Brothers Holdings, Inc. and its affiliated debtors filed a plan of reorganization Monday with the U.S. Bankruptcy Court for the Southern District of New York.

In conjunction with the plan, Lehman has requested court approval to establish a new subsidiary that would provide management services and administer the debtors' assets.

According to the plan, the new company will allow Lehman to capitalize on existing infrastructure for the management of long-term investments and illiquid assets and will also provide long-term employment opportunities for the company's employees.

Treatment of creditors will include:

• Holders of administrative expense claims, priority tax claims and priority non-tax claims will be paid in full in cash;

• Holders of secured claims will either be paid in full in cash, receive the proceeds from the sale of the collateral securing the claim, receive the collateral or see the claim remain unaltered;

• Holders of senior unsecured claims will receive a share of available cash and a senior unsecured claim share of reallocated distributions;

• Holders of general unsecured claims will receive a share of available cash;

• Holders of subordinated unsecured claims will receive no distribution until all senior unsecured claims are paid in full, in which case they would receive a share of available cash;

• Holders of intercompany claims will receive a share of available cash;

• Holders of third-party guarantee claims will receive a share of available cash, provided, however that they will not be entitled to a total recovery of more than 100% of their primary claim;

• Holders of affiliate guarantee claims will receive a share of available cash;

• All equity interests in Lehman Brothers Holdings will be cancelled, and one new share of common stock will be issued to the plan administrator for the benefit of the equity interest holders consistent with their former economic entitlements.

However, the administrator cannot exercise any voting rights, and the interest holders will receive no distribution unless all other holding company creditor classes have been paid in full, in which case they would receive a share of any remaining assets; and

• Holders of equity interests in subsidiary debtors will receive no distribution unless all other creditors of that debtor have been paid in full.

Lehman said the plan administrator will file a form 15 with the Securities and Exchange Commission on the plan effective date to terminate the registration of any of its publicly traded securities.

New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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