Lehman Brothers Financial SA (LEHNQ)

[newflow]

CTs holders have the right to receive the subordinated note and that note is due immediately.
The events that transpire in the event
of deferral and ultimate non-payment
of dividends are important to under
-
standing the limits to the loss absorp
-
tion capacity of TruPS. As described by
the Federal Reserve, “The terms of the
TruPS allow dividends to be deferred
for at least a twenty-consecutive quar
-
ter period without creating an event
of default or acceleration. [color=red]After the
deferral of dividends for this twenty
quarter period, if the BHC fails to
pay the cumulative dividend amount
owed to investors, an event of default
and acceleration occurs, giving [trust
preferred] investors the right to take
hold of the subordinated note issued
by the BHC [to the SPE]. At the same
time, the BHC’s obligation to pay prin
-
cipal and interest on the underlying
junior subordinated note accelerates
and the note becomes immediately due
and payable.[/color]

https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin10/siwinter10-article1.pdf