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rl,
"Now, back in November, LBHI walked away from $300 million ,I believe, in a deal where the hedge fund just asked to look at the books,I believe. Judge Peck refused the request.I,IMO, think this was a huge decision. If LBHI had limited assets: wasn't hiding, holding back the true value of assets, not book value, but real value, why would they not take the $300 million?"
So, what are you saying, rl?
The Judge turned down the request because the assets were assumed by another party under another contract?
That seems like a reasonable conclusion.
Are there any other possible outcomes as a result of the denial?
mojo
Well presented, Stockbum.
If I was negotiating a multi-billion dollar merger and a party agreed to assume a $1.2B trust liability with a 5 year payment deferment period, would I try to make it so quarterly notifications would not have to be sent out?
Probably.
With all due respect, I don't see the relevance of autotel's position on notification in this case.
mojo
robi,
The CUSIP, the interest rate, the maturity date & the total claim amount are not precisely accurate.
So, it is likely this claim has little, if any, relevance to CT shareholders.
I'd like to think our Trustee, however, will not file a $1.5B claim lightly.
Administratively, if there is any technicality any part of the Trust could be denied payment in the BK, it is incumbent on the Trustee to file paperwork, even if it could be duplicitous.
In this case, for example, if the Trust is funded and brought current, this may be a claim that is considered "completed" through other executor contracts and denied in the Court on 6/24.
But, that is 100% speculation on my part and one of a number of potential outcomes.
mojo
robi,
#21802 identifies a false CUSIP number. It is footnoted.
I ran the CUSIP through FINRA and nothing came up.
I'm also skeptical of the 12/28/2017 maturity date and 6 3/4%interest rate without confirmation of the CUSIP.
Do you know why a false CUSIP would be filed?
There may be an explanation but it seems to me it could also explain why the claim is being delayed until the 6/24/2014 meeting and not earlier.
mojo
Argus,
"LBIE was not “balance sheet insolvent” but “cash flow insolvent”"
There is a Keynesian economic theory about efficient markets that is also relevant:
"Markets can remain irrational longer than you can stay solvent."
Or,
I respect that you're strong, but in the end, everybody breaks, Bro. It's biology. - CIA, Zero Dark Thirty
mojo
daisy:
"How is there a $100B Hole in terms of A<L while European unsecured creditors are getting inflated returns amounting to extra $5B?"
I see the hole developing from selling undervalued assets in an appreciating market that had contracted creditor claims that never changed in face value, unless they were paid off or paid as agreed in the POR.
"Does reconcile for me..."
I'm not sure what it is you mean by this but, if it makes sense to you, then that is a good thing. Keep in mind what makes sense to you may not be exactly how any of this is implemented or applied 100%; in other words, your success in this BK may depend on your ability to apply all the pertinent covenants and components that go into a Court decision or contracts and I don't know how this can be done based solely on this message board, press releases and Epiq dockets.
"Is this issue of waterfall priority?"
It could very well be waterfall priority. It could also be some press release designed to spin distributions to parties a certain way.
Pay outs of an "extra" sum could be a good sign that pay outs are running ahead of expectations. If the POR has classified claims with any "extra" payments, they are being paid along the lines of the classification of the claim and the prospectus of the claim.
I would estimate the claim payment process is administered with as much justification as possible in the event the claim or the Estate then seeks to contest a payment in Court.
I'm hoping for positive outcomes with as much value realized for the Lehman Estate as possible.
mojo
"Lehman Europe Creditors in Line for $8B"
Link: http://finance.yahoo.com/news/lehman-europe-creditors-line-extra-8-billion-payday-000307580--sector.html
mojo
Yes, Camaro.
I didn't know if you had made calls and e-mails.
I know some have.
It seems people are working on it with the Court documents being filed as they are.
I haven't called the Trustee yet mostly because of the stay in effect and the POR Distribution scheduled for later this month.
What could be gleaned by such a phone call?
If the Trustee is working out payments of some type, why would he say anything other than if the written notification was sent out?
If he is making a Court filing, why would he make any comment unless the filing was actually entered into Court records or a press release?
mojo
gussie:
"WOW I call that reaching for the stars! BAC is in a whole lot better shape than Lehman. Just don't look at Bac's PPS as it drops faster than Lehman does..????? Not bad for a BV of twenty + and trade in the low 16.00 but hey whats a bank going to do that is so evil? I guess Lehman should feel the same way? Bad Banks Bad Banks! Someone going to make allot of money somewhere?"
I can't tell from this, gussie, whether you need to pee or stand up?
Hah!
mojo
Camaro,
Have you tried calling the Trustee rep for a Court filing date if he has one?
I would think the Trustee would let the process work itself through and be as accommodating as possible before leaping to the Courts to argue on behalf of aggrieved parties.
Typical New York Bankers: "No news is good news but you know the dates. We have the same page".
mojo
Camaro,
Like Buffet's BAC shares that were converted last week to Capital Trust shares for Tier 1 requirements and a 5 year non-payment provision, I see the CTs as part of an executive agreement to capitalize a large bank.
Irishintelligence posted a great breakdown of exactly what capital would be raised for a bank and how it could be done inexpensively at today's prices.
It wouldn't surprise me that the CT Trustee would be approached to re-negotiate some CT covenants similar to the BAC-Buffet negotiations that could bring the CTs more in line with Dodd-Frank and other recent regulations being implemented with implications for international institutions doing business in the US.
There is the possibility the Trustee has to go to the Courts after May 20 to pursue these negotiations as well.
So, either way, the CTs could be resolved and out of the Lehman Estate by the end of the stay in May or within a few months after.
They could be resolved even earlier by the distribution of the POR.
So, here is hoping for good news.
mojo
gussie!
Everyone who has read the balance sheet understands the $100B+ deficit, a point you belabor again and again.
There is also the mortgage position Lehman holds on the AAA CBD property in France that could make for further write downs, if not others.
It is the bondholders that are going to lose the majority of that from this point forward.
My reasoning is any new issue is going to come out with additional write downs for debt holders. And, there will likely be little, if any, conversion rate for common equity while the preferreds could get something depending on the utilization of NOLs.
The NOL position is so large, most Lehman creditors want the entire estate liquidated and the NOLs used to withhold tax payments that go to Equity Holders (51%) and Debt Holders (49%) and cash out the POR. This process could take much longer.
There is a significant possibility the CTs will have nothing to do with Lehman anymore after the stay expires in May.
So, the $100B+ deficit point reiterated has limited utility in my mind.
Why post it again and again other than to insist Lehman isn't going to make it and they must comply with the POR?
mojo
rl,
This is hardly a new issue.
Barclays purchase agreement can be retrieved through Epic's website and contains a letter by Barclays which contains the exact wording they prefer to use in the deal.
Semantics.
mojo
rl,
From Wikipedia:
<<Barclays had a potential liability of $2.5 billion to be paid as severance, if it chooses not to retain some Lehman employees beyond the guaranteed 90 days.>>
It remains possible IMO that the CTs are these potential liabilities that could be structured as severance for former Lehman employees.
Barclays routinely denied assuming debt in Court relating to the purchase agreement with any Lehman property.
This denial with the deferment of coupons for 20+ quarters makes for secrecy and plausibility Barclays prefers.
mojo
Camaro,
Maybe a 10% - 20% chance that it could still happen.
I can't say how but I won't rule the option out 100%.
All the legal rights are in the CT prospectus which the Judge has confirmed in case decisions with C, but it depends on liability transfer agreements by executive order that are business to business and could be delayed with the stay.
Most every administrative party associated in this case wants secrecy and plausibility.
So, be it.
mojo
s404:
<<So your a politician? is that it.>>
I'm just an investor.
I'm not a politician.
Regards.
mojo
Another article for you:
http://www.reuters.com/article/2014/02/21/us-usa-housing-fanniemae-idUSBREA1K0WL20140221
I decided against buying FnF when the Government bought in. I missed out on these at a very cheap price.
A lot of people made a lot of money.
Good for them.
mojo
I should add the liquidation they are proceeding with involves a asset management agreement to preserve enterprise value, maintain employment and take advantage of the increasing number of opportunities coming available as they are running this business as a going concern.
mojo
So, LAMCO is now set up to manage LBHI in an asset management agreement as approved by the Creditors Committee.
They are proceeding with liquidation and LBHI is contributing $20M to help them set it up.
The creditors interests remain in effect.
Has BNYM scheduled a meeting with LAMCO & the Court about the CTs?
Has LAMCO given BNYM a response regarding full repayment guarantees of cumulative trust coupons at 6% interest?
mojo
I like Zell.
I flew in to see him in Chicago from SF.
He opened a door, said, "Hello", closed the door and had an assistant visit with me.
I'd do a deal with Mr. Zell, but he has a lot of management over assets that have already gone public.
I'm not sure of the synergies in a Lehman-Zell deal, besides they sold out of the EQR/AVB today.
There is another wealthy individual Sam knows that I know that might make for a better fit.
But, I'm not the guy heading M&A on Lehman.
If that guy wants to meet me, he can send me a message at stockmojo9@outlook.com
Good luck.
mojo
Thank you, joe, as I haven't had this discussion before and can use the term debt holder conveniently and with a better understanding.
However, the term we have used in this case for 5 years, as well as the term used commonly in other BK proceedings is DIP which means "Debtor In Possession" hence the introduction of the term and instrument.
Nonetheless, the term debt holders can mean a population holding an aggregate of debt instruments where Lehman is to be the payer and they are the payee.
Yes, there it is again - semantics.
mojo
joe
It depends on the instrument.
So, if a creditor owns a Lehman liability and not a shareholder equity, they are a Lehman debt holder.
Symantics. It is confusing but a necessary delineation.
mojo
$120M Balance Sheet? $94M in current assets?
I don't know what SGGH could do.
It isn't efficient with the Lehman Estate in my view.
Lehman's largest debtors have more invested in Lehman than ten times the balance sheet of SGGH.
A lot of these Debtors are in a better position to invest for 30% to 49% for a Lehman subsidiary.
There are other private companies with larger balance sheets than SGGH, but maybe Zell can make it attractive somehow as he is a man of means.
Or, Barclays can step in and claim it all.
mojo
My point is the 49% merger interest possibly available is most likely to come from one of the larger debtor position holders since they will most likely suffer the largest write downs should Lehman continue towards 100% liquidation.
Using the SGGH example, I'm wondering if this is why Zell got involved: He had an interest SGGH that was likely subject to further risk if he didn't make an additional investment and retrieve all possible assets including the NOLs.
The fact, however, that SGGH has not used NOL credits may be more about the inefficiency of SGGH and Zell to use the NOLs successfully and less about the appraised value of NOLs themselves.
mojo
What is Zell's history of interest in SGGH?
mojo
I like that, too, hestheman.
But, I've identified earlier the problem with going towards 100% liquidation and waiting to do a new issue with cash, illiquid assets, NOLs and a skeleton staff of ex-bankers with no book of business.
The investment community is going to say, "What am I investing in with these new commons?"
So, the debtors better roll out the red carpet and find a deal to keep the business and business owners around.
mojo
Liabilities Subject to Compromise running at $290B from POR.
Illiquid assets to be about $15B.
Income to be about $5B per year + NOLs.
So, Liabilities need to come in to about $100B at 5%.
How does Lehman get there?
1. Crediting POR payments to principal.
2. Utilizing tax credits with NOLs.
3. Negotiating more liability write downs.
4. Keeping more assets for income and developing opportunities.
5. Winning legal decisions in Court.
6. Re-positioning the assets on the market in areas where the business can provide services for revenues.
At some point, all this becomes do-able and more. But, I don't work close enough to the Estate where I know the time table.
Lastly, why are there illiquid accounts identified and held? The only answer in my mind is they've identified assets with guarantees they have to pay back with post-tax credit monies.
mojo
That is all public info and the $290B is on the operating balance sheet since last June.
There is a structure in place for these Liabilities to be negotiated further and I hope this structure continues.
guster posted he bought some debtor positions in addition to the CTs he sold out of yesterday.
No doubt guster would want to see the debtor positions to increase their pay out ratios before the Creditor positions or CTs with re-payment guarantees to see anything.
You can continue to got through the machinations set in place in the POR by GS.
But at some point, there could be a rising tide that will lift all boats, both creditor & debtor, for more headroom away from a constrictive POR.
It hasn't been done yet and we continue to wait for that time.
mojo
It's not all there, guster.
Hopefully, there will be more disclosure.
mojo
Well, if you can't answer the question with new valuations, you can have the last word.
Good luck.
mojo
I'm hoping they will come out with an update on Liabilities to be Compromised.
Isn't this a category that will ever be updated? Renegotiated? Discounted?
If these Debtors are winding up with some Lehman assets, why does the category stay the same?
Is it because the category can't be renegotiated until all available cash is paid out and the Lehman Estate is illiquid?
Why should the Debtors wait for that?
mojo
<<I still think they will liquidate to the bone and then exit with the new entity.>>
Maybe you're closer to this than I am, but I don't see 100% liquidation as an advantage unless some steep debtors discounts are part of it.
Isn't it easier to run an investment bank with some high-quality investments and a staff with a proven record in different service sectors?
If you liquidate 100%, how much are you planning on starting with that is worth investing in by the Street?
Hypothetically, you can have billions in cash, pay a Trust and offer a new issue, but what business is the public to believe they are investing in?
Additionally, real estate is as valuable as the quality and duration of the business income generated on it. If you wind down the business on it and start over, you are separating yourself and the cash from the business and starting from ground zero. That's the fire sale that reduces creditor & debtor value.
mojo
They extend the stay for an orderly unwind.
Like they sell stock assets instead of planes in hangers.
I'm thinking they know there will be a post-BK entity, but they're hoping to finish legal battles without duress, work with banking partners, restrict potential Creditor positions with any guarantees, hold merger discussions and make room for further Debtor negotiations.
They have to have things a certain way before they operate out from under the POR, but what do I know?
I'm far from sitting inside the Courtroom.
Good luck.
mojo
OK, wayner.
So, the Credit Protection Trust isn't the SPV Stay Motion we are watching closely?
Good.
The State of the Estate should be interesting also. Hopefully, a good story will be released in the news today.
mojo
Docket 42908 provides the agenda for a State of the Estate to be presented before the Court as well as a Credit Protection Trust (207/283) issue as well as other OBS filings.
I don't see any SPV filing scheduled by the SPV name.
Docket 42901 identifies "NOTICE OF ADJOURNMENT OF THE FOUR HUNDRED FIFTY-SIXTH OMNIBUS OBJECTION TO CLAIMS (NO LIABILITY CLAIMS)" and by it's filing alone, I cannot tell if this will be the discussion of the SPV we are interested in.
Do you have more detail from the docket filings today?
There is FHLB and Giants Stadium docket filings as well.
mojo
Dispute?
I think joe is claiming Lehman is pure Liquidation when the filing was for Chp. 11 with a POR.
wayner, you're stating the Chp 11 filing contained a provision for a reorganized entity or new issue to emerge within the POR.
That is fine, but I'd like joe to respond.
What is evident to me is there is a tone difference in posts of debtors and creditors on this board.
This explains many of gusts points.
mojo
joe,
<<WMIH was created within the POR. Lehman has no such vehicle.>>
You're "vampire squid", aren't you?
mojo
I had posted on a response you made regarding guster selling to wayne & LD.
I was wondering how they would do the transaction that's all.
mojo
What do you think they'll do, Camaro?
Seller opens another account at his brokerage and transfers the stock over for the buyer.
Then the buyer sends a payment into the broker to be registered in the seller's other account?
Not sure what they can do but it's interesting.
mojo
edbk:
"math of bk...it can be confusing...liabilities are listed as fact but are they?...ie claims awaiting adjustment...assets listed at liquidation and /or depreciation value...the old mark to mark trick...Kmart did not hide any assets they were given the depreciation...value not market...that is the argument...orderly liquidation plus are these claims "real"" - Yes, simplifying some statements into hypothetical functions using the Estate figures can, nonetheless, be constructive to a degree. Shareholders are suffering from limited information that is characteristic of Pink Sheet stocks that don't have the same reporting requirements.
"the wamuq bk was interesting but this was a different bk, assets were greater than liabilities, but the board ceo did not fight for the company" - Killinger tried, but was a glorified loan broker, not an MBA and trusted by the Street without reservations.
"aig fnnma usg gra the board ceo fought hard this in my opinion is why wamuq turn out like it did kmart immediately went with sears with all real estate now at fair market value" - OK
"i think that lehm ceo/board is fighting for this company plus like wamuq the nol will be use. there is just two much money to be made" - $55B to $70B in NOLs is a lot of tax credits and I don't see the Debtors giving those away for nothing even if it means additional 20%+ of position write downs. Yes, Fuld has a lot to answer for, helped establish ridiculous loan requirements at the Aurora subsidiary, lost millions in personal wealth, and chased around BAC, Buffet & others ad nauseum, but he was a trained & educated banking professional with a prestigious book of business.
mojo