Best observation:
It might be a good idea to expand the maximum check-box answers on the form for:
Estimated Number of Creditors (Over 100,000).
Estimated Assets (More than 1 Billion).
Estimated Liabilities (More than 1 Billion).
Potential Inaccuracies:
“Does the debtor own or have possession of any property that poses or is alleged to pose a threat of imminent and identifiable harm to public health or safety?” Yes [ ] No [X].
(Though, I suppose it is possible Dick Fuld has been fired, and this is why his ego is not triggering this provision).
Most Potentially Screwed Creditors (though note that some of these may be listed in their capacity as trustees for the debt issues, not as creditors):
CitiBank, Bank of New York (jointly): “Approximately $138 billion” in “Bond Debt.”
Bank of New York (solely): $17 billion.
Aozora Bank, Ltd., Tokyo: $463 million.
Country Other Than The United States With Most Potentially Screwed Creditors:
Japan- about $1.6 billion. (First the real estate in the 80s, now this, HAH!)
Best “That About Sums It Up” Figures:
Total Assets: $639 billion. (AHEM!)
Total Liabilities: $613 billion.
Most Obvious Equity Pain:
Name / % of Common Stock Held
AXA and related parties / 7.25%
ClearBridge Advisors, LLC and related parties / 6.33%
FMR LLC and related parties / 5.87%
Method For The Very Broker-Dealish Lehman To Avoid Chapter 7?
File at the holding company level?
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BBerg reports that Bill “the sky is falling” Gross owns a ton of LEH debt.
My favorite quote of the day is this:
“An outside spokeswoman for PIMCO in London, who asked not to be named, said the company had no immediate comment.”
OK, thanks for that bit of information!
1st
eff lehman
Nothing is fucked here Dude. You are acting very un-Dude like…
Nothing is FUCKED! WALTER THEIR GONNA KILL THAT POOR WOMAN!
can someone give me a quick answer as to why it was 11 and not 7?
@4
I’m trying to figure that out because it used to be 11 wasn’t available to finanacial institutions. The glaring difference is 7 is a liquidation and 11 is a restructuring, but we all know LEH isn’t coming out of this…….maybe it just allows them more control over the disposition of the assets than 7 where everything is on the block immediately.
It’s gonna take a lawyer to explain how they did this….
@4
I’m trying to figure that out because it used to be 11 wasn’t available to finanacial institutions. The glaring difference is 7 is a liquidation and 11 is a restructuring, but we all know LEH isn’t coming out of this…….maybe it just allows them more control over the disposition of the assets than 7 where everything is on the block immediately.
It’s gonna take a lawyer to explain how they did this….
5 – They filed as the holding company. It’s to try to keep more control over the liquidation.
This isn’t your Dad’s Chapter 11, basically.
In the following site you will find the affidavit explaining Lehmans’ troubled and the official bankruptcy petition.
http://www.rnfc.org/ivey/
I was also wondering how they got away with the CHPT 11 @ the Holding Company level when, as you’ve pointed out, they are very broker/dealerish…
also, can you file chpt 11 when you’re not technically insolvent (as the assets appear to still outweigh liabilities)…haven’t taken a close look but just some first thoughts
Looking at the press release closely it indicates that no US Lehman Broker dealer subsidiaries or Neuberger are filing. However it looks like several Lehman’s subsidiaries in Europe and Japan are going into liquidation. Several possibilities I can think are that are these entities are worth very little i.e. whatever value Lehman has is in the US, many other countries don’t tend to recogonize the Chapter 11 process in general, or that much of the toxic waste on Lehman’s books is held by overseasa subs.
Maybe its a stalling tactic until a judge picks up the case and forces them to a 7?
Dick peed on my rug.
SPODE
BNYMellon (which is one company now)
Press accounts have said that Lehman’s bankruptcy filing lists BNY Mellon as a major creditor. Please note that BNY Mellon is listed because it is the corporate trustee for Lehman debt issues. BNY Mellon has no loans to Lehman and minimal direct credit exposure.
Holding company is 11…
B/D biz will be 7…
Regardless, I think the boyz over at Weil know what they are doing and didn’t let Dickie go and file the 11 himself (though I’m sure he wanted to )…so 11 it is!
Over/under on WM failing before Halloween?
14 What’s gonna force the BD business into 7?
Chapter 11 allows the debtor to remain in possession of the assets, as opposed to a Chapter 7 where an outside Trustee steps in. An 11 allows for a more orderly liquidation, and also allows the entity to remain operational to wind up business.
Bill Gross was on CNBC this morning, and he said PIMCO has some CDS from AIG, and they are trying to “reposition them”.
Good to have you back, EP.
Good to have you back, EP.
@ 13
What does LEH’s $138b “unsecured debt” mean for BK and C? Can anyone clarify this.
Should have went to law school…goddamn.
-PD
That bank really tied the industry together. And they PEED on my bank? This will not stand. This aggression will not stand, man.
HAHA Bankers you overpaid assholes get what you deserve! Consultants rule! We’re going to make so much cash off of integration services… Damn it feels good to not be a banker.
This can’t be happening to me. I went to HBS!
@17
Chapter 11 is not a liquidation, it presumes the business is an ongoing concern, which is why we, who are not experts at the arcan minutia (sp) of BK law, are trying to figure out how they were entitled to 11 when we know a liquidation is going to take place.
11 because Neuberger and potentially other units will be worth more when sold as a going-concern. other subs will be liquidated. courts will recognize this and try to recover the most for creditors.
Agree with @13: Citi and BNYMellon exposure is custodial holdings.
BK rules require that…otherwise counterparties sieze assets as collateral in outstanding trades if it goes 11
i told those fucks down at the league office a thousand times that i don’t roll on shabbos.
The Japanese? Those sandal-wearing goldfish-tenders? Bosh! Flimshaw!
BK rules require that…otherwise counterparties sieze assets as collateral in outstanding trades if it goes 11
@16 et al: I don’t know the relevant laws/regulations but broker-dealers do not have the option to file for Chapter 11. They must file Chapter 7 and liquidate. I believe the SIPC takes over as trustee and manages the liquidation. Lehman filed at the holdco level to avoid the Chapter 7 filing since the holdco is not the broker-dealer entity.
AllianceBernstein LP (NYSE: AB) was the largest holder of LEH common, as well as FRE and second largest in FNM, all of these positions were taken in the last quarter…OUCH!!!
@ 4 fugawdsakes hotshot, put on your thinking cap.
it’s a workout. just because there are no reasonable bidders doesn’t mean the assets have no value.
it’s a defensive move; it allows for a restructuring that isn’t done with guns to your head and the clock ticking.
it took a lot of guts, actually.
the way things turned out, with MER getting a deal, this was probably among the more positive outcomes under the circumstances.
EP – You may be off on BoNY. Here’s what I heard from them: “Press accounts have said that Lehman’s bankruptcy filing lists our company as a major creditor. Please note that we are listed because we are the corporate trustee for Lehman debt issues. We have no loans to Lehman and minimal direct credit exposure.”
For those that are interested, this seems to do a decent job summarizing, although it is more from the perspective of a BD client:
http://www.willkie.com/files/tbl_s29Publications%5CFileUpload5686%5C2574%5CSummary_of_Key_Bankruptcy_Code_and_SIPA_Related_Issues.pdf
@13 – sorry, saw you already said the same thing.
BK rules require that…otherwise counterparties sieze assets as collateral in outstanding trades if it goes 11
The original plans were to go ch11 at the holding company level, and ch7 with the BD. By filing ch11 (but not 7 on the bd) they can go for bankrupcy treatment while buying a few days for the broker dealer business to remain intact. It is no secret they are trying to sell their brokerage and asset management businesses. If they file ch7 that would be impossible, as an immediate liquidation would dissolve those assets immediately. If they can sell those assets in whole, rather than in a ch7 liquidation there would presumably be greater recovery to bankrupcy trustees. However, if a few days go by with no transaction on the bd/asset business, i imagine 7 will soon follow (wed, thurs?).
Follow-up to 36: This explains why Lehman checked “other” on its petition for “nature of business”
That’s a great plan, Dick. That’s fuckin’ ingenious, if I understand it correctly. It’s a Swiss fuckin’ watch that’s chapter 7 and 11.
SPODE
8 year olds dude. 8 year olds.
I am the Walrus.
I am the Walrus.
Walter, what is the point? Look, we all know who is at fault here, what the fuck are you talking about?
SPODE
@BSD – no worries
Walter, what is the point? Look, we all know who is at fault here, what the fuck are you talking about?
SPODE
It’s great that you are back EP. However, your idea of a fun way to vacation boggles the mind.
Lennon?
ps hoffman and goodman at their finest.
I did not watch my buddies die in Vietnam face down in the mud just so that Lehman Brothers could file…that rug really tied the room together. DID IT NOT!?
This aggression will not stand, man.
@25: The presumption in 11s is that you reorganize an ongoing concern, but you can liquidate through an 11. Liquidating 11s are more common where the assets are difficult to price or not susceptible to immediate sale (along with a whole host of other considerations). Think: who’d you want divvying up LB’s assets: people who’ve lived the game for their business careers, or some Trustee on the Chapter 7 panel? Trust me, I’ve done this for a living over the past dozen or so years. I know what I’m a-talking ’bout.
Smokey, my friend, you are entering a world of pain.
You mark that frame an 8, and you’re entering a world of pain.
The Bankruptcy Code prescribes which chapter a debtor can file for protection under (e.g.: a municipality can file only under chapter 9). Ultimately, it does not matter which chapter a debtor files under because most of the provisions of the bankruptcy code will still apply to the case. Filing under chapter 11 does not preclude a liquidation. There is chapter 11 liquidation. Commercial Financial Services (CFS) was liquidated under chapter 11 a few years ago.
So he says “My wife’s a pain in the ass. She’s always busting my friggin’ agates. My daughter’s married to a real loser bastard. And I got a rash so bad on my ass, I can’t even sit down. But you know me. I can’t complain.”
If the broker/dealer legal entity is still solvent then technically, and please correct me if I’m wrong, the holdco doesn’t have to file chpt 7 and should be able to reorganize under chpt 11, unless there is a precedent (carney?) that if the operations are substantially broker/dealer then the holdco will be treated as a b/d and forced into chpt 7.
Rank speculation on my part, anyone?
Just one thing Dude, do you have to swear so much?
Dead. Horse. Still. Being. Beaten.
Weil filed 11 because they know what f’ they are doing. Move on.
V.I. Lenin!
Just to get the most perfect quote in early for when (if) it happens:
“Sometimes you eat the Bar(clays), and sometimes, well, he eats you”
@57…reply back of the day!
Sioux City sasprilla?
Much obliged…
@ 56
” Look, I’ve got certain information, certain things have come to light, and uh, has it ever occurred to you, man, that given the nature of all this new shit, that, uh, instead of running around blaming me(LEH), that this whole thing might just be, not, you know, not just such a simple, but uh–you know?”
What are you blathering about! The plane has crashed into the fucking mountain!
@61
“Well sure, look at it! A Solid, venerable institution , I mean, in the parlance of our times, owes money all over town, including to known pornographers–and that’s cool, that’s cool– but I’m saying, LEH needs money, and of course they’re gonna say they didn’t get it ’cause they want more, man, LEH gotta feed the monkey, I mean–hasn’t that ever occurred to you…? Sir?”
@61
“Well sure, look at it! A Solid, venerable institution , I mean, in the parlance of our times, owes money all over town, including to known pornographers–and that’s cool, that’s cool– but I’m saying, LEH needs money, and of course they’re gonna say they didn’t get it ’cause they want more, man, LEH gotta feed the monkey, I mean–hasn’t that ever occurred to you…? Sir?”
You couldn’t be more correct!
At least some bloggers can write. Thank you for this piece!