Lehman plan administrators reach deal to settle loan repurchase claims

By Caroline Salls

Pittsburgh, April 3 – Lehman Brothers Holdings Inc.’s plan administrator reached an agreement with 14 institutional investors represented by Gibbs & Bruns LLP under which the plan administrator made a binding offer to the trustees for 244 Lehman RMBS trusts to settle mortgage repurchase claims related to covered loans, according to a Gibbs & Bruns news release.

The trustees have until June 1 to accept the offer.

Under the agreement, the allowed amount of the mortgage repurchase claims submitted under the existing loan review protocol for covered loans will be determined by the Lehman bankruptcy court in an estimation proceeding to begin in October 2017.

In the estimation proceeding, the plan administrator and the trustees will each have the opportunity to present evidence to support their views as to the allowable value of the covered loan claims submitted by the trustees under the protocol that was established by the court.

Gibbs & Bruns said the plan administrator agreed to request that the trusts’ claims on account of covered loans be allowed in the amount of $2,416,000,000. If the court determines the claims are in a range of $2 billion to $2,416,000,000, they will still be allowed in the amount of $2,416,000,000.

In exchange for the plan administrator’s agreement to request a $2,416,000,000 claim for the covered loan claims, rather than a lower claim, the trustees will waive their right to appeal a court decision as long as the court determines the claim in an amount greater than $2 billion.

The agreement also includes a release of all repurchase claims that have been or could have been asserted by the trusts in connection with covered loans.

The institutional investors who are parties to the agreement are Aegon USA Investment Management, LLC, BlackRock Financial Management Inc., Cascade Investment, LLC, Federal Home Loan Bank of Atlanta, Goldman Sachs Asset Management, LP, Invesco Advisers, Inc., Kore Advisors, LP, Metropolitan Life Insurance Co., Pacific Investment Management Co. LLC, Sealink Designated Activity Co., TCW Group, Inc., Thrivent Financial for Lutherans, Voya Investment Management LLC and Western Asset Management Co.

The agreement is subject to acceptance of the trustees.

New York-based Lehman Brothers was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.

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