Lehman Brothers Financial SA (LEHNQ)

[Joe Stocks]

Wayne, The trustee of the lehman estate can buy back claims at a discount if it benefits the creditors. If it is a $21.4 billion claim and the estimated recovery looks to be 40% or $8.560bil, and the estate can buy the claim back for a 10% discount, or $7.7 bil, that is $860 million more that can be distributed to the creditors.

Keep in mind in the example above that Lehman has taken $7.7 bil in cash out of the estate, and the dollar amount of claims outstanding is reduced by 21.4 bil. I think the balance sheet said it is only shown off balance sheet to calculate recovery percentage. The liabilities are reduced and what Lehman paid is reduced from assets. It is a wash.

LBHI buying back a claim does not create anything of value for LBHI. If it paid itself for the claim, x amount dollars would go out of LBHI, and the same x amount would come back in.

Write a check to yourself, deposit it, and see how much extra money you have.

The claim is indeed cancelled and marked "satisfied in full."