Tell us what is going on here champ! We need a Holiday gift from you!
*** Docket 57036
"20. If authorized, LBHI intends to issue the Substituted Preferred Stock under the Charter and instruct that the GP deliver them to the holders of ECAPS, which will then no longer have any rights or interest in respect of the ECAPS. After its issuance, the Substituted Preferred Stock would be compromised pursuant to the Plan as if it had been issued on the Commencement Date for all purposes in these Chapter 11 Cases. Among other things, each ECAPS holder would be entitled to a portion of any residual value of the Plan Trust up to the value of the liquidation preference of such holder’s Substituted Preferred Stock. Upon the substitution, the net value of the Partnership Assets would ultimately inure to the creditors of LBHI through its ownership of the GP and certain non-Debtor intermediate subsidiaries that own the Preferential Limited Partner. Treatment consistent with LBHI’s preferred equity is exactly what the ECAPS holders bargained for when they invested in the ECAPS. ECAPS holders were compensated for their investment risk that LBHI preferred stock would be substituted for their ECAPS in the event of, among other things, LBHI’s commencement of a chapter 11 case. The substitution aligns parties’ economic entitlements with their expectations ex ante. Further, to ensure that a Preferred Securities Substitution is in the best interests of the Chapter 11 Estates, the Plan Administrator plans to seek confirmation from the Internal Revenue Service that the substitution will not result in adverse tax consequences to the Chapter 11 Estates. 5 The Plan Trust now holds the Plan Trust Stock “for the benefit of holders of such former LBHI Stock consistent with their former relative priority and economic entitlements.” Under Section 7.4(a) of the Plan: “The sole purpose of the Plan Trust shall be to hold the Plan Trust Stock as provided in Section 4.17(b). . . . Any distribution from assets of LBHI that is made to the Plan Trust as holder of such [Plan Trust Stock] shall be for the benefit of the holders of Equity Interests in accordance with Section 4.17(b).” 08-13555-scc Doc 57036 Filed 11/21/17 Entered 11/21/17 18:21:29 Main Document Pg 11 of 19 9 WEIL:\96296832\22\58399.0011 21. The circumstances of these complex Chapter 11 Cases are unusual: the administration of the Chapter 11 Estates continues long after the Effective Date of the Plan and depends on the Plan Administrator’s continued operations including collecting on claims against and interests in Non-Controlled Affiliates, the current value of which could not have been imagined on the Effective Date. The Debtors are seeking to effectuate the Preferred Securities Substitution as soon as reasonably practicable after the Commencement Date, bearing in mind the unique size and complexity of these Chapter 11 Cases, coupled with the myriad cross-border affiliate transactions and tax considerations that had to be analyzed. The ECAPS holders have suffered no prejudice as a result of any delay in issuing the Substituted Preferred Stock. 22. The Preferred Securities Substitution may be challenged in England by the holders of ECAPS. Any such challenges, presumably questioning compliance with the contractual requirements for a Preferred Securities Substitution, are matters for an English Court, are not before this Court, and are unlikely to prevail. Although there may be questions of English law and usage, it is possible that the English Court would be interested in input from this Court regarding the history and characterization of these Chapter 11 Cases, and that it may become appropriate for this Court to assist the English Court on this issue. The Court May Authorize the Issuance of the Substituted Preferred Stock"
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"26. The Preferred Securities Substitution is in the best interests of LBHI and its creditors because it enables LBHI to preserve substantial value for the benefit of its creditors. Absent the Preferred Securities Substitution, the holders of ECAPS could receive a windfall at the expense of LBHI’s creditors. The holders of ECAPS expected to receive LBHI preferred stock in the event of an LBHI bankruptcy. They could not reasonably have expected to receive recoveries on ECAPS based on the Partnership Assets contrary to the plain language of the ECAPS Terms. A Preferred Securities Substitution will provide holders of the ECAPS with the 08-13555-scc Doc 57036 Filed 11/21/17 Entered 11/21/17 18:21:29 Main Document Pg 13 of 19 11 WEIL:\96296832\22\58399.0011 securities that they expected to receive following the Commencement Date—preferred stock in LBHI—and its corresponding Plan treatment and equity value. 27. Issuance of the Substituted Preferred Stock furthers the Plan Administrator’s duty “to maximize Distributions to holders of Allowed Claims.” (Plan § 6.1(b)(iii).) No creditor or equity holder of LBHI is harmed in its capacity as such. Creditors’ recoveries will increase by the amount of the Partnerships’ net value. And the potential for recovery at all to equity holders will only increase. (Holders of LBHI Class 12 Equity Interests are nevertheless not expected to receive any Distributions on account of such interests.) Issuance of the Substituted Preferred Stock will not conflict with the purpose of any of the Effective Date amendments to LBHI’s certificate of incorporation: achieving strict compliance with certain requirements of the Bankruptcy Code and protecting the LBHI tax group’s tax attributes. 28. The Preferred Securities Substitution is akin to the allowance of LBHI Class 12 Equity Interests in the aggregate amount of the ECAPS’ notional value. The Plan Administrator already has the authority to allow Class 12 Equity Interests6 and requires Court approval primarily for the ministerial act of issuing the Substituted Preferred Stock—an act in furtherance of the implementation of the Plan but not expressly authorized by it. To prevent creditors from losing LBHI’s bargained-for entitlement to any value of the Partnership Assets, the Court should authorize the issuance of the Substituted Preferred Stock. 6 Under the Order Modifying Certain Existing Claims Orders (ECF No. 29505), “[t]he Plan Administrator is authorized to settle any and all Claims . . . asserted against the Debtors without prior approval of the Court or any other party in interest where . . . the allowed amount of the settled Claim is less than or equal to $200 million[.]” 08-13555-scc Doc 57036 Filed 11/21/17 Entered 11/21/17 18:21:29 Main Document Pg 14 of 19 12 WEIL:\96296832\22\58399.0011 Conclusion 29. For the reasons set forth above, the Plan Administrator requests that the Court enter an order in the form attached hereto as Exhibit A to permit LBHI to issue the Substituted Preferred Stock. Notice "
*** Old post from COTTONISKING ***
LBHI signed their August and September 2008 guaranties and security agreements prepetition.
Pre December 6, 2011, a deal was cut to contractually let LBHI’s creditors have the value of the CTs/TRuPS BNYM's Trusts (class 10ABC reallocations) and the value of the UK's ECAPS partnerships.
The CTs/TRuPS and ECAPS guarantees gives them the ability to receive payments without going thru the trusts or parnerships, respectively. This is why a subset of the ECAPS were given allowed claims (payments on their principal balance) on June 22 and July 12 of 2016 (see my previous posts).
JPMCB is holding LBHI's TRuPS and UK's ECAPS (Global certificate is in the name of a JPMCB affiliate [initial limited partner]) guarantee allowed claims by way of "Unaffected Matters" (The new style curve ball that the Debtors did not anticipate).
To deny the TRuPS and ECAPS back interest confirms that LBHI is in a wind-down state!
From the Plan Administrator's lips to our ears!
"The relief requested will enable LBHI’s creditors to realize the value of those five partnerships to which they are contractually entitled."
*** prepetition prepetition prepetition
LBHI signed their August and September 2008 guaranties and security agreements prepetition.
"It will ensure that both LBHI and the holders of the ECAPS remain in the economic positions and recover in the priorities to which they contractually agreed prepetition, preventing a windfall to third parties at the expense of creditors of LBHI."
*** From Docket 57036
"Lehman Brothers Holdings Inc. (“LBHI”), as Plan Administrator under the Modified Third Amended Joint Chapter 11 Plan of Lehman Brothers Holdings Inc. and Its Affiliated Debtors (the “Plan”)1 for the entities in the above-referenced chapter 11 cases (the “Chapter 11 Estates”), files this motion and respectfully represents: Relief Requested 1. By this Motion, the Plan Administrator requests authority to cause LBHI to issue preferred stock so that such stock is available to substitute for equity securities (the “ECAPS”) previously issued by five non-debtor partnerships. The relief requested will enable 1 Capitalized terms used but not defined herein have the meanings ascribed to such terms in the Plan. 08-13555-scc Doc 57036 Filed 11/21/17 Entered 11/21/17 18:21:29 Main Document Pg 4 of 19 2 WEIL:\96296832\22\58399.0011 LBHI’s creditors to realize the value of those five partnerships to which they are contractually entitled. It will ensure that both LBHI and the holders of the ECAPS remain in the economic positions and recover in the priorities to which they contractually agreed prepetition, preventing a windfall to third parties at the expense of creditors of LBHI."
