New Repayment Plan of Lehman Gets More Support

by San Antonio Attorney

The new $65 billion repayment plan of Lehman Brothers Holdings Inc. won the approval of its bondholders and derivatives creditors.

According to the bankrupt investment bank its new plan has gained more support which could possibly set the stage for the completion of the bankruptcy.

If the court approves it, the plan could let what is left of the firm to exit Chapter 11 protection and start paying off creditors. According to Chief Executive Bryan Marsal, the payments will hopefully start in 2012.

In the court papers filed on Wednesday, Lehman said that it believed that its largest creditors agree with their revised plan.

Its previous proposals sparked two contending repayment plans from major creditors such as the Goldman Sachs Group Inc and hedge fund Paulson & Co.

The revised plan includes payments for many unsecured creditors which is only a fifth of the amount they were supposed to be paid.

According to Lehman, the new plan would distribute higher amounts to guaranteed claim holders as opposed to the treasury units and derivatives of Lehman, which include Morgan Stanley, Goldman Sachs, and hedge fund Silver Point Capital LP. The Paulson group will receive less money than the earlier proposal.

Lehman filed for Chapter 11 protection in 2008. It used to be the fourth-largest U.S. investment bank that had $639 billion of assets before it declared bankruptcy. The investment firm’s bankruptcy was a huge set-off for the worldwide financial crisis.

Under the revised liquidation plan, unsecured creditors from the parent company will get 21.1 cents for every dollar, lower than the 21.4 cents of the January proposal. Other holder of unsecured debts will receive 19.9 cents for every dollar.

The U.S. bankruptcy judge presiding over the bankruptcy proceedings of Lehman Brothers Holdings Inc is James Peck.

A hearing to consider the issues on Lehman’s repayment plan is scheduled on July 20.

In some situations a company will file for chapter 11 bankruptcy.  That allows the company to restructure its debt and form a payment plan that is formulated with the bankruptcy trustee.  If your company is having financial issues, consider a San Antonio Bankruptcy for debt relief.

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