Lehman Brothers Financial SA (LEHNQ)

[Joe Stocks]

Lehman had a contractual obligation to issue LBHI preferred shares to ECAP holders if LBIE went under. The thinking was that if LBIE went under, LBHI would be the more secure holding. And ECAP buyers/holders felt more secure having LBHI also securing and backing the ECAPs.

Well, then we all know what happened. Both LBIE and LBHI filed BK. UK courts ruled that the two could not be combined. LBHI wanted LBIE to be in US Court as they knew that LBIE was in better shape. The UK court would not have that.

So LBHI moved to issue LBHI preferred shares as contracted hoping to backdoor putting the ECAPs in US court in Class12. LBHI hoped that would leave a bigger pool/recovery for them in LBIE.

ECAPs said no thanks to that offer. They felt they would receive more under LBIE's subordinated position.

That is a quick synopsis of what happened with the ECAPs and LBHI.
I don't have the link available but you should read the prospectus for the ECAPs and you will see the link with LBHI.

BTW, my partner's son left Alvares last year and joined my former partner in my former business.