lehman brothers holdings inc., et al.: (jmp): debtors.: (jointly administered): x amended joint substantively consolidating chapter 11 plan for lehman brothers holdings inc. and certain of its affiliated debtors other than merit, llc. Jan 19, · Lehman Brothers Holdings Inc. filed for bankruptcy on Sept. 15, , making this week the 10 year and, uh, 4 month anniversary of what might be the central event of the global financial crisis. Substantive Consolidation. The Bankruptcy Code does not expressly authorize substantive consolidation, although it recognizes that a chapter 11 plan may provide for the consolidation of a "debtor with one or more persons" as a means of implementation. Rather, substantive consolidation is a product of judicial gloss that preceded enactment of.
Download our plug-in for Chrome to get customizable, real-time news alerts. Expert Analysis. Previously, on March 15, , the Lehman Debtors had filed a placeholder plan to preserve exclusivity, but such plan was not accompanied by a disclosure statement and unsecured creditors were left in the dark as to estimated recoveries. The Lehman Plan proposes an economic resolution of the claims of creditors, and incorporates resolutions of various inter-debtor, debtor-creditor Stay ahead of the curve In the legal profession, information is the key to success.
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Lehman's attorney Harvey R. On September 22, , Nomura Holdings, Inc. A few weeks later it was announced that conditions to the deal had been met, and the deal became legally effective on Monday, October Lehman's bankruptcy was expected to cause some depreciation in the price of commercial real estate.
Additional pressure to sell securities in commercial real estate was feared as Lehman got closer to liquidating its assets. Archstone's core business was the ownership and management of residential apartment buildings in major metropolitan areas of the United States. Jeffrey Spector, a real-estate analyst at UBS said that in markets with apartment buildings that compete with Archstone, "there is no question that if you need to sell assets, you will try to get ahead" of the Lehman selloff, adding "Every day that goes by there will be more pressure on pricing.
It said the assets accounted for 1. Shareholders also fled from Goldman Sachs and Morgan Stanley. Two weeks later, the Fed agreed to give them bank holding company status which provided vital access to the Fed discount window. Evergreen Investments said its parent Wachovia Corporation would "support" three Evergreen money-market funds to prevent their shares from falling.
Close to hedge funds used Lehman as their prime broker and relied largely on the firm for financing. In an attempt to meet their own credit needs, Lehman Brothers International routinely re-hypothecated  the assets of their hedge funds clients that utilized their prime brokerage services. Lehman Brothers International held close to 40 billion dollars of clients assets when it filed for Chapter 11 Bankruptcy.
Of this, 22 billion had been re-hypothecated. As a result, the hedge funds were forced to de-lever and sit on large cash balances, inhibiting chances at further growth. The Bank of Japan Governor Masaaki Shirakawa said, "Most lending to Lehman Brothers was made by major Japanese banks, and their possible losses seem to be within the levels that can be covered by their profits," adding, "There is no concern that the latest events will threaten the stability of Japan's financial system.
Lehman was a counterparty to mortgage financier Freddie Mac in unsecured lending transactions that matured on September 15, Freddie also said it "does not know whether and to what extent it will sustain a loss relating to the transactions" and warned that "actual losses could materially exceed current estimates. Farmer Mac said it might not be in compliance with its minimum capital requirements at the end of September.
Conversely, bankers note that minibonds are indeed low-risk instruments since they were backed by Lehman Brothers, which until just months before its collapse was a venerable member of Wall Street with high credit and investment ratings. The default of Lehman Brothers was a low probability event, which was totally unexpected. Indeed, many banks accepted minibonds as collateral for loans and credit facilities. The Hong Kong government proposed a plan to buy back the investments at their current estimated value, which would allow investors to partially recover some of their loss by the end of the year.
Under intense pressure from the public, all political parties came out in support of the investors, further fanning distrust towards the banking industry. Neuberger Berman Inc. Neuberger and Robert Berman, to manage money for high-net-worth individuals. In the decades that followed, the firm's growth mirrored that of the asset-management industry as a whole.
In , it introduced one of the first no-load mutual funds in the United States, the Guardian Fund , and also began to manage the assets of pension plans and other institutions. Historically known for its value-investing style, in the s the firm began to diversify its competencies to include additional value and growth investing , across the entire capitalization spectrum, as well as new investment categories, such as international, real-estate investment trusts and high-yield investments.
In addition, with the creation of a nationally and several state-chartered trust companies, the firm became able to offer trust and fiduciary services. In October , the firm conducted an initial public offering of its shares and commenced trading on the New York Stock Exchange , under the ticker symbol "NEU". In July , shortly after the retired Mr. Neuberger's th birthday, the company announced that it was in merger discussions with Lehman Brothers Holdings Inc.
An article in The Wall Street Journal on September 15, , announcing that Lehman Brothers Holdings filed for Chapter 11 bankruptcy protection , quoted Lehman officials regarding Neuberger Berman: " Neuberger Berman LLC and Lehman Brothers Asset Management will continue to conduct business as usual and will not be subject to the bankruptcy case of the parent company, and its portfolio management, research and operating functions remain intact.
In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and aren't subject to the claims of Lehman Brothers Holdings' creditors, Lehman said.
Just before the collapse of Lehman Brothers, executives at Neuberger Berman sent e-mail memos suggesting, among other things, that the Lehman Brothers' top people forgo multimillion-dollar bonuses to "send a strong message to both employees and investors that management is not shirking accountability for recent performance". Lehman Brothers Investment Management Director George Herbert Walker IV dismissed the proposal, going so far as to actually apologize to other members of the Lehman Brothers executive committee for the idea of bonus reduction having been suggested.
He wrote, "Sorry team. I am not sure what's in the water at Neuberger Berman. I'm embarrassed and I apologize. Richard Fuld , head of Lehman Brothers, faced questioning from the U. I have a very basic question for you, is this fair? In March , the report of Anton R. Valukas , the Bankruptcy Examiner, drew attention to the use of Repo transactions to boost the bank's apparent financial position around the date of the year-end balance sheet.
On April 12, , a story in The New York Times revealed that Lehman had used a small company, Hudson Castle , to move a number of transactions and assets off Lehman's books as a means of manipulating accounting numbers of Lehman's finances and risks.
One Lehman executive described Hudson Castle as an "alter ego" of Lehman. According to the story, Lehman owned one quarter of Hudson; Hudson's board was controlled by Lehman, most Hudson staff members were former Lehman employees.
On February 22, , Judge James M. Peck of the U. Bankruptcy Court in the Southern District of New York rejected claims by lawyers for the Lehman estate that Barclays had improperly reaped a windfall from the section sale.
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