Lehman Commercial Paper settles claims tied to Latshaw loan agreement

By Caroline Salls

Pittsburgh, May 13 - Lehman Brothers Holdings Inc. debtor Lehman Commercial Paper Inc. requested court approval of a claim settlement with Latshaw Drilling Co., LLC and Latshaw Drilling and Exploration Co., Inc., according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Lehman Commercial Paper was responsible for funding 75% of a $100 million credit agreement with the Latshaw entities.

The company said Latshaw had borrowed $63 million under the loan as of Sept. 17, 2008. Although Latshaw tried to draw the remaining available balance on Lehman's bankruptcy filing date, Lehman Commercial Paper said it did not fund its share of the balance.

According to the motion, the Latshaw entities filed a claim against Lehman Commercial Paper, but that claim was subsequently withdrawn.

Lehman Commercial Paper filed a $45.85 million claim against the Latshaw entities in February 2010 for principal, interest, costs, fees and expenses due under the credit agreement.

Under the settlement agreement, the Lehman Commercial Paper claim will be allowed in a reduced amount, which was not specified in the motion.

In addition, Latshaw will be excused from making interest payments on the restructured credit agreement for one year, and some covenant restrictions will be modified so that Latshaw can use specified free cash for capital expenditures in excess of those permitted under the credit agreement.

On the settlement effective date, Lehman Commercial Paper will receive a lump-sum payment for payments deposited in escrow under Latshaw's own Chapter 11 plan.

Lehman Commercial Paper said it will receive subsequent additional payments to satisfy its claim over the term of the restructured credit agreement.

A hearing is scheduled for June 15.

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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