Lehman Brothers Sets First Round of Pay Outs to Unsecured Creditors

by San Antonio Attorney

Lehman Brothers will start to distribute $4.6 billion to unsecured general creditors next month. It is the first round of payment distribution from the former investment bank.

The distribution will start on Sept. 10 based on the notice filed by Trustee James Giddens. More pay outs to unsecured general creditors will follow.

The payouts to all unsecured general creditors followed only after all customer claims had been paid first. The claims of priority and secured creditors also were satisfied.

Lehman’s individual customers were paid back almost immediately after the brokerage’s liquidation. However, it took a long time for Lehman Brothers Inc., Lehman Brothers International, and Lehman Brothers Holdings Inc., to reach a decision on how they would pay the claims for larger clients of every unit, like institutional investors and hedge funds. They finally agreed in 2012 and filed their arrangements to the bankruptcy court in February 2013. The agreements were approved, settling the differences among the three entities.

Approximately $110 billion will have been dispersed from the brokerage’s estate when customer claims and the first round of pay outs to unsecured general creditors are included.

Lehman Brothers Holdings Inc. has emerged from Chapter 11 in March 2012. However, it still has assets worth billions of dollars and more money to pay creditors, so the company is likely to exist in some form for many years.

Lehman’s bankruptcy filing five years ago was the start of the global financial crisis and was a major trigger of the financial meltdown. Lehman stated $639 billion in assets and was the biggest bankruptcy in the history of the United States.

Chapter 11 bankruptcy involves restructuring of a business. Large corporations often file under this chapter. They will get a fresh start after their duties under their reorganization plans are fulfilled.

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