Bankruptcy Court Approves Procedures for Determining Allowed Amounts of Structured Securities Claims
August 12, 2011
The United States Bankruptcy Court for the Southern District of New York, overseeing the bankruptcy cases of Lehman Brothers Holdings Inc. (“LBHI”) and its affiliated debtors (collectively, the “Debtors”), entered an order on Aug. 10, 2011 approving procedures for determining — for both voting and distribution purposes — the allowed amounts of claims filed based on structured securities issued or guaranteed by LBHI (the “Structured Securities”).1 The order can be accessed here, and the Debtors’ motion for the order can be accessed here.
As described in greater detail below, the Debtors will notify Structured Securities claims holders of their proposed allowed claim amounts in the coming weeks. Holders will have 60 days after the Debtors deliver notice to object to the Debtors’ proposed allowed amount of their Structured Securities claims. Failure to submit a timely objection will be deemed consent to the proposed allowed claim amount.
The specific procedures are as follows:
Debtors’ Notice of Proposed Allowed Claim Amount
- On or before Aug. 15, 2011, the Debtors will publish, on www.lehman-docket.com, a list of Structured Securities claims and the corresponding proposed allowed claim amounts (the “Proposed Allowed Claim Amounts”), calculated using the valuation methodology posted to the site on Jan. 25, 2011.
- On or before Aug. 24, 2011, the Debtors will send to each holder of a Structured Securities claim included on the official claims register as of Aug. 1, 2011 a notice of Proposed Allowed Claim Amount. The notice will, among other things, list the Proposed Allowed Claim Amount and the response deadline.
Objection to Proposed Allowed Claim Amount
- To dispute the Proposed Allowed Claim Amount, an objecting holder of a Structured Securities claim must send a written response, delivered so that LBHI, the Debtors’ counsel and the counsel to the official committee of unsecured creditors actually receive it no later than 60 days after the delivery of the notice of Proposed Allowed Claim Amount.
Claim Allowance in Absence of Response
- If a holder of a Structured Securities claim does not object to the Proposed Allowed Claim Amount on or prior to the response deadline set forth in the notice, the non-objecting holder will be deemed to have consented to the Proposed Allowed Claim Amount for purposes of voting and distributions under the Debtors’ Chapter 11 plan.
ADR to Resolve Disputes
- If the Debtors and an objecting holder are unable to resolve a dispute of the Proposed Allowed Claim Amount, the claim will be treated as a “Contested Claim” and subject to the ADR Procedures previously approved by the bankruptcy court.2
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1 The Structured Securities include certain (i) structured notes issued by LBHI; (ii) structured notes issued by Lehman Brothers Treasury Co. BV; (iii) certificates and warrants issued by Lehman Brothers Securities NV; (iv) structured securities issued by Lehman Brothers (Luxembourg) Equity Finance SA; (v) certificates issued by Lehman Brothers Finance SA; and (vi) structured notes issued by Lehman Brothers Bankhaus AG. The Structured Securities do not include the 56 securities actually issued by LBHI under the “European Medium Term Note Program” that are “Lehman Programs Securities.”
2 The ADR Procedures are governed by the Order Pursuant to Section 105 of the Bankruptcy Code, Bankruptcy Rule 9014, and General Order M-390 Authorizing the Debtors to Implement Claims Hearing Procedures and Alternative Dispute Resolution Procedures For Claims Against Debtors, entered April 19, 2010 [Docket No. 8474], accessible here.
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