old filing, but good reading
Form 8-K for LEHMAN BROTHERS HOLDINGS INC
14-Dec-2011
Bankruptcy or Receivership, Material Modification to Rights of Secur
Item 1.03. Bankruptcy or Receivership.
Confirmation of Modified Plan of Reorganization
As previously disclosed, on September 15, 2008 and periodically thereafter, Lehman Brothers Holdings Inc. ("LBHI") and certain of its subsidiaries (collectively, the "Debtors") commenced voluntary cases under chapter 11 of title 11 of the United States Code with the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") (jointly administered proceedings, In re Lehman Brothers Holdings Inc., Ch. 11 Case Number 08-13555).
On December 6, 2011, the Bankruptcy Court entered an order (the "Confirmation Order") confirming the Modified Third Amended Joint Chapter 11 Plan of Lehman Brothers Holdings Inc. and its Affiliated Debtors (the "Plan"). The Plan was accepted by 71,553 creditors asserting claims in the aggregate amount of approximately $400 billion against the Debtors (which represents 95% in number and 98.68% in amount of voting creditors). A copy of each of the Plan and the Confirmation Order (as confirmed by the Bankruptcy Court) is attached hereto as Exhibit 2.1 and Exhibit 2.2 respectively, and each is incorporated herein by reference. The Plan is not yet effective. In accordance with Article XII of the Plan, the Plan will become effective upon the satisfaction or waiver of certain conditions precedent. The Debtors anticipate that the Effective Date of the Plan will not occur before January 31, 2012.
Summary of the Plan
The following is a summary of the material features of the Plan. This summary is qualified in its entirety by reference to the Plan and the Confirmation Order. To the extent there is a conflict between this summary and the Plan or Confirmation Order, the Plan or the Confirmation Order, as applicable, shall govern. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
The Plan constitutes 23 separate plans, one for each chapter 11 Debtor. The Plan does not substantively consolidate the Debtors or their Affiliates. Allowed Claims against a Debtor will be satisfied primarily from the orderly liquidation of the assets of that Debtor. The Plan incorporates separate classification and distribution schemes for each of the Debtors and separately classifies Priority Non-Tax Claims, Secured Claims, unsecured Claims, and Equity Interests. The Plan also includes Classes of Convenience Claims for LBHI and the Participating Subsidiary Debtors, and provides that holders of Allowed Convenience Claims will receive a Distribution in a fixed amount, in Cash, on the Effective Date or as soon thereafter as is practicable. The Participating Subsidiary Debtors are Lehman Commercial Paper Inc. ("LCPI"), Lehman Brothers Special Financing Inc. ("LBSF"), Lehman Brothers OTC Derivatives Inc. ("LOTC"), Lehman Brothers Commodities Services Inc. ("LBCS") and Lehman Brothers Commercial Corporation ("LBCC"). In total, there are one-hundred sixty one (161) Classes of Claims against and Equity Interests in the Debtors, including seventeen (17) Classes against LBHI, nine (9) Classes against each of LCPI and LBSF, eight (8) Classes against each of LBCS, LOTC and LBCC, and six (6) Classes against each of the other Debtors.
Distributions from each Debtor will be made in accordance with the Plan. After satisfying or reserving in full for secured, administrative, and priority claims, and the payment of Convenience Claims in accordance with the Plan, each Debtor will distribute its Available Cash to unsecured creditors on a pro rata basis. In some cases, portions of Distributions will be
reallocated in accordance with a global settlement (the "Global Settlement"), as more fully described below.
The Plan is premised on a Global Settlement that resolves various issues presented by the Debtors' Chapter 11 Cases (the "Plan Issues"). The Plan Issues include: (i) whether the equitable doctrine of substantive consolidation may be applied to the Debtors and their Affiliates; (ii) the characterization of intercompany balances owed to LBHI by Subsidiary Debtors; (iii) the Allowed amounts of certain Affiliate Claims; (iv) the ownership and rights of various Debtors and their Affiliates with respect to certain assets; (v) the allocation of costs and expenses among Debtors; and (vi) corporate governance of the post-Effective Date Debtors. Pursuant to the Global Settlement, the Plan incorporates a series of interconnected concessions by creditors to expedite the administration of the Debtors' Chapter 11 Cases, to avoid the cost of litigation over the Plan Issues, and to finally and fully resolve the Plan Issues.
The resolution of the Plan Issues and the Global Settlement are implemented through various mechanisms. The primary settlement mechanism in the Plan is the Plan Adjustment. Pursuant to the Plan Adjustment, Guarantee Claims asserted against LBHI by third-parties in LBHI Classes 5, 9A and 9B reallocate 20% of their recoveries to direct third-party unsecured creditors of LBHI in LBHI Classes 3 and 7. All unsecured Claims against the Participating Subsidiary Debtors also are required to reallocate a percentage of their recoveries to direct third-party unsecured creditors of LBHI in LBHI Classes 3 and 7.
The second settlement mechanism in the Plan is the resolution and treatment of Affiliate Claims, in particular, Guarantee Claims asserted by Affiliates against LBHI. The Plan provides that Affiliate Claims against the Debtors are to be Allowed in settled amounts or must be litigated. The Debtors have entered into bilateral settlement agreements with a number of their Non-Controlled Affiliates, including Lehman Brothers Bankhaus AG (in Insolvenz), Lehman Brothers Treasury Co. B.V., Lehman Brothers Securities N.V., Lehman Brothers
(Luxembourg) Equity Finance S.A. (en faillite), Lehman Brothers (Luxembourg)
S.A. (in liquidation) and various affiliates in the United Kingdom, including Lehman Brothers International (Europe), Hong Kong, Singapore and Japan. Copies of those settlement agreements are annexed to the Plan or were included in the Plan Supplement (the "Plan Supplement") attached as Exhibit 99.1 to LBHI's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 28, 2011. In addition, the Debtors have entered into settlements with certain third-party creditors, including three German governmental entities, which settlements were included in the Plan Supplement, and Deutsche Bank and certain holders of participations in Claim Nos. 59006 and 58233 (the "Deutsche Bank Settlement"). A copy of the Deutsche Bank Settlement is annexed hereto as Exhibit 10.2. All of the foregoing settlement agreements were approved by the Bankruptcy Court pursuant to the Confirmation Order.
Third, the Plan provides that LBHI's Claims against the Subsidiary Debtors will receive distributions based on an amount equal to 80% of those Claims, which . . .
Item 3.03 Material Modification to Rights of Security Holders
Pursuant to the Plan, on the Effective Date, all existing equity securities issued by LBHI will be cancelled in exchange for the Trust Interests. One share of Plan Stock, which will represent all issued and outstanding equity securities of LBHI, will be issued to the Plan Trust who shall hold such share for the benefit of the holders of such former equity securities of LBHI consistent with their former relative priority and economic entitlements as holders of LBHI's equity securities. Each holder of an existing equity interest of LBHI shall neither receive nor retain any property or interest in property on account of such equity interest other than the Trust Interests. The Trust Interests shall entitle their holders to receive distributions with respect to the Plan Stock pursuant to the Plan. LBHI does not expect holders of Trust Interests to receive any distribution because the creditors of LBHI and the other Debtors are not expected to be paid in full. LBHI intends to file a Form 15 with the Securities and Exchange Commission as soon as practicable following the Effective Date to terminate the registration of LBHI's common stock. Thereafter, LBHI's reporting obligations under the Securities Exchange Act of 1934, as amended with respect to LBHI's common stock shall be terminated.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(d) On the Effective Date, and as contemplated by the Plan, Michael L. Ainslie, John F. Akers, Roger S. Berlind, Thomas H. Cruikshank, Marsha Johnson Evans, Sir Christopher Gent, Roland A. Hernandez and John D. Macomber shall cease to be directors of LBHI. Frederick Arnold, Robert S. Gifford, Thomas A. Knott, Sean O. Mahoney, David Pauker, Ronald K. Tanemura and Owen D. Thomas were, pursuant to and on confirmation of the Plan, appointed directors of LBHI, effective as of the Effective Date.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K, Exhibit 2.1, Exhibit 2.2, Exhibit 10.1 and Exhibit 10.2 hereto may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to LBHI's financial condition, results of operations, and business that is not historical information. As a general matter, forward-looking statements are those focused upon future or anticipated events or trends and expectations and beliefs relating to matters that are not historical in nature. The words "believe," "expect," "plan," "intend," "estimate," or "anticipate" and similar expressions, as well as future or conditional verbs such as "will," "should," "would," and "could," often identify forward-looking statements. LBHI believes there is a reasonable basis for its expectations and beliefs, but they are inherently uncertain, and LBHI may not realize its expectations and its beliefs may not prove correct. LBHI undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. LBHI's actual results and future financial condition may differ materially from those described or implied by any such forward-looking statements as a result of many factors that may be outside LBHI's control. Such factors include, without limitation: (i) the effectiveness of the plan of reorganization with respect to the Chapter 11 Case; (ii) LBHI's ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 Case; and (iii) the potential adverse impact of the Chapter 11 Case on LBHI's liquidity or results of operations. This list is not intended to be exhaustive.
LBHI's informational filings with the Bankruptcy Court are available to the public at the office of the Clerk of the Bankruptcy Court, Alexander Hamilton Custom House, One Bowling Green, New York, New York 10004-1408. Such informational filings may be available
electronically, for a fee, through the Bankruptcy Court's Internet world wide web site (www.nysb.uscourts.gov), and/or free of cost, at a world wide web site maintained by LBHI's Bankruptcy Court-approved noticing agent (www.lehman-docket.com).
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
2.1 Modified Third Amended Joint Chapter 11 Plan of Lehman Brothers Holdings Inc. and its Affiliated Debtors, dated December 5, 2011, and filed with the United States Bankruptcy Court for the District of Delaware on December 6, 2011, and as confirmed by the United States Bankruptcy Court on December 6, 2011.
2.2 Order Confirming Modified Third Amended Joint Chapter 11 Plan of Lehman Brothers Holdings Inc. and its Affiliated Debtors, dated December 6, 2011, as entered by the Bankruptcy Court.
10.1 Form of Plan Trust Agreement by and among Lehman Brothers Holdings Inc. and the Plan Trust trustees party thereto.
10.2 Settlement Agreement, dated as of November 23, 2011, by and among Lehman Brothers Holdings Inc., Lehman Commercial Paper Inc., Deutsche Bank AG, Monarch Alternative Capital LP, Stone Lion Portfolio L.P., Permal Stone Lion Fund Ltd., Centerbridge Credit Advisors LLC and Anchorage Capital Group, L.L.C.
