Lehman Brothers Holdings Inc., which collapsed nearly seven
years ago, increased its estimate of how much money it will recover
to $92.2 billion, thanks to gains in real estate, derivatives and
private-equity investments.
In a Wednesday filing with U.S. Bankruptcy Court in Manhattan,
Lehman increased the number, which is net of operating
disbursements, by $1.8 billion from its last quarterly estimate.
Such increases have been a hallmark of the failed bank since it
collapsed into bankruptcy in 2008.
Of the $92.2 billion, Lehman already has paid out $72.4 billion
to so-called third party, or non-Lehman, creditors. In April,
Lehman made its seventh distribution to outside creditors, paying
them $6.3 billion. For those creditors—among them a number of hedge
funds such as Paulson & Co. that spent the years after Lehman's
collapse buying claims at steep discounts—the increased recoveries
are adding hundreds of millions in profits already booked.
Including money given to Lehman and its affiliates, the total
amount returned is nearly $100 billion. In March, Lehman said it
expects to make its next distribution early this fall.
Lehman, once the world's fourth-largest investment bank,
collapsed into the largest bankruptcy ever in September 2008. Since
then, the estate has recovered billions of dollars in cash for the
benefit of creditors.
Bankruptcy professionals under the direction of Alvarez &
Marsal Inc. managed the New York holding company's assets until
Lehman's exit from chapter 11 more than three years ago, when a
reorganized company that was overseen by a new board of directors
emerged.
Lehman has been careful throughout its case not to sell off
assets at bargain-basement prices, and it has paid off for the
estate. As of April 2, the company still had about $1.14 billion in
commercial real-estate assets, $181 million in loans and
residential real estate and $1.99 billion in private equity
investments, according to the Wednesday filing.
Earlier this year, Lehman said it was entering the next phase of
its liquidation—a time to focus on litigation and unsettled
claims—"during which increasingly more court resources will be
required to advance the process and provide final resolution and
distributions to creditors."
Separate from the investment bank, Lehman's brokerage, which is
being unwound by trustee James W. Giddens in accordance with the
Securities Investor Protection Act, has already returned around
$112 billion to creditors. Those creditors should get about $1.89
billion more if a judge approves his most recent distribution at a
hearing next week.
Write to Joseph Checkler at joseph.checkler@wsj.com
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