Lehman Preferred Series "J" Preferred (fka LEHJQ)

[TASHI]

UPDATE 2-Lehman expects reorganization plan in 1st qtr

Wed Nov 18, 2009 12:28pm EST

* Lehman has more than $16 bln in cash

* 64,000 claims against bank top $820 bln, may top $1 trln

* Lehman CEO says is operating on 24-month time frame

* Lehman estate managing $14.4 bln in real estate assets
(Recasts first sentence, adds court hearing details, CEO
comments, other background)

By Emily Chasan and Chelsea Emery

NEW YORK, Nov 18 (Reuters) - Lehman Brothers Holdings Inc
(LEHMQ.PK), the U.S. investment bank whose September 2008
collapse sharply accelerated a world financial meltdown, said
on Wednesday it expects to have a reorganization plan outline
ready by the end of March 2010.

The bankrupt investment firm is contending with more than
64,000 claims from creditors with a face amount value of more
than $820 billion. Lehman's chief executive, turnaround
specialist Bryan Marsal, said in bankruptcy court on Wednesday
it was possible the claims could reach $1 trillion due to
certain unresolved issues.

Lehman is working to categorize the claims, the company
said in a securities filing. Initial claim objections are
expected to be filed in the next 30 to 45 days.

Lehman has been gaining increasing control over its assets
and now has cash holdings of $16 billion, Marsal said at a
hearing in U.S. Bankruptcy Court in Manhattan.

Marsal said he is working on a 24-month time frame that
would envision having Lehman on its way out of bankruptcy court
by the second anniversary of its bankruptcy filing. However, he
cautioned the court that some people "would tell me I'm nuts"
and that it may end up leaving bankruptcy on a three-year time
frame or longer if it cannot resolve certain issues in time.

Among those issues are whether it will need to file one
reorganization plan, or many, for all the different Lehman
units operating in bankruptcy. Other issues are outstanding
intercompany claims and claims against Lehman's international
operations, as well as a time-intensive process to resolve
derivatives claims, Marsal said.

Financial reporting is improving and becoming more current,
after the disruption caused by Lehman's abrupt bankruptcy
filing in September 2008, the company said. It expects to
report its June 30 balance sheet by Nov. 30. Marsal said Lehman
was also moving ahead of schedule with a plan to move off of
computer systems owned by Barclays, which acquired its U.S.
brokerage and had much of the information about the
Lehman-owned assets.

An examiner overseeing the company's operations is expected
to submit a report by Feb. 1, Lehman said.

Lehman is also managing some $14.4 billion in real estate
assets and has "stabilized" its bank platform assets, which it
envisions could yield a significant recovery for creditors if
certain regulatory issues are resolved, Marsal said. He said
Lehman has also reduced its unfunded real estate commitments to
below $400 million.

LAWSUITS

Lehman, which is engaged in several lawsuits related to
issues surrounding its collapse, is also likely be entangled in
more litigation ahead, Marsal said.

Lawyers for the firm sued Barclays Capital (BARC.L)
earlier this week to claw back billions of dollars of excess
profit it claims Barclays received in its hurried purchase last
year of Lehman's U.S. brokerage business. Discovery is under
way, according to the securities filing.

Marsal said Lehman was also moving ahead with litigation
against Bank of America Corp (BAC.N) which acted as a clearing
bank for Lehman, helping it process transactions around the
time of its bankruptcy. Marsal said more litigation against its
clearing banks would also be forthcoming. One of those clearing
banks is JPMorgan Chase & Co. (JPM.N)

The litigation represents a major source of potential
recovery for creditors, Marsal said. Even if the lawsuits take
longer than 24 months, Marsal said they should not hold up
Lehman's reorganization plan. Creditors could receive a
distribution after the reorganization plan is in effect, Marsal
said.

The case is In re: Lehman Brothers Holdings Inc, U.S.
Bankruptcy Court, Southern District of New York, No. 08-13555.
(Reporting by Emily Chasan and Chelsea Emery, editing by
Matthew Lewis)

© Thomson Reuters 2009 All rights reserved

http://www.reuters.com/article/managementIssues/idUSN1811131020091118