AI Your eligibility for a trust distribution from the Lehman Brothers Holdings Inc. (LBHI) bankruptcy depends on the Plan's "record date," not when you sold the securities. Since you held the shares on the March 6, 2012 effective date of the Plan, it is likely that your claim was created, but your subsequent sale would have transferred your right to any future distributions. Here is a breakdown of why this is the case: The effective date is key The Lehman Brothers Plan of Reorganization became effective on March 6, 2012. On that date, all pre-bankruptcy LBHI securities were cancelled. Beneficial interests in the LBHI Plan Trust were then created for the holders of those securities. Since you owned the capital trust preferred securities on March 6, 2012, you were initially entitled to the beneficial interest in the Plan Trust created for those shares. Your sale transferred the right to distributions Unless specific documentation was filed at the time of your sale, the right to receive distributions from the trust would have been transferred to the buyer. This is because bankruptcy claims are treated as property and can be bought and sold. For any distribution, the Plan Administrator sets a "record date" to determine who is entitled to the payment. Since you sold your shares after the effective date of the Plan, it is the buyer, not you, who would be registered as the beneficial owner for subsequent distributions. To receive a distribution, the acquirer of a claim must ensure their ownership is properly recorded before the record date. Distributions for capital trust preferred securities are unlikely Even if you had retained your interest, it is important to note that distributions for your class of securities are unlikely. Distributions are only made to former stockholders (including preferred securities) after all higher-priority creditor claims have been satisfied in full. According to a 2025 FAQ from the Plan Administrator, it was not anticipated that any distribution would be made to holders of LBHI equity interests (which includes capital trust preferred securities).
Case 2 Bad News Non-transferable
Selling your Lehman Brothers Holdings Inc. (LBHI) capital trust preferred securities after the bankruptcy plan's effective date would have meant you transferred your right to any future trust distributions to the buyer. The beneficial interest in the plan trust is tied to the ownership of the securities at the time the plan became effective, which was March 6, 2012. Here is a breakdown of why you are no longer eligible for distributions: Effective Date: The LBHI Chapter 11 plan became effective on March 6, 2012. Cancellation of Shares: On the effective date, all existing shares of LBHI common and preferred stock, including capital trust preferred securities, were legally canceled. Transfer of Rights to the Plan Trust: The plan then transferred the rights of those shareholders to a new "Plan Trust." Beneficial interests in this trust were issued to the individuals who were the record owners of the canceled stock as of the effective date. Beneficial Interest is Nontransferable: Critically, the beneficial interests in the Plan Trust are explicitly nontransferable. Effect of Your Sale: When you sold your securities after April 1, 2012, you were essentially selling the now-worthless original shares. The buyer would have no claim to the beneficial interest in the Plan Trust, which was already created and assigned to you (as the holder on March 6, 2012). The buyer bought nothing of value regarding the trust. However, your sale of the underlying security does not, by itself, represent a transfer of the beneficial interest in the trust. The key is whether you completed an explicit legal transfer of your claim While beneficial interests in the trust are nontransferable, an explicit legal transfer of your claim (not the original canceled shares) could potentially have been possible. However, such a transfer would have been a separate transaction requiring specific legal filings. If you simply sold the securities through a brokerage account, that action does not transfer the beneficial interest created on the effective date. What you should do Because the beneficial interests are non-transferable, you, as the holder on March 6, 2012, should be the party still eligible for any distributions. However, to confirm your eligibility and ensure your contact information is up to date, you should contact Epiq, the claims and distribution agent for the LBHI cases.
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