Lehman Bros 7.25% Pref'd Series P (fka LEHPQ)

[DJN]

Lehman Has $48 Billion in Operating Loss Tax Benefits (Update1)

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January 20, 2010, 11:21

http://www.businessweek.com/news/2010-01-20/lehman-has-48-billion-in-operating-loss-tax-benefits-update1-.html

By Linda Sandler

Jan. 20 (Bloomberg) -- Lehman Brothers Holdings Inc., the investment bank liquidating in bankruptcy, has accumulated $48 billion in net operating losses, or NOLs, which it aims to use to offset taxes on an eventual sale of its assets to benefit creditors, according to a U.S. Bankruptcy Court filing.

Lehman so far has raised $17.2 billion in cash and intends to recover $40 billion to $50 billion in the next five years by selling real estate and other assets, Chief Executive Officer Bryan Marsal said in an interview last week.

U.S. tax law allows bankrupt companies to use accumulated losses to offset taxable gains on such sales as long as the corporate ownership doesn’t change, Lehman said in yesterday’s filing.

The defunct investment bank’s NOLs have more than quadrupled since it filed for bankruptcy in September 2008 with $613 billion in debt. Lehman said in bankruptcy court the next month its net operating losses were “in excess of $10 billion.”

Lehman reported the NOLs yesterday as part of a move to restrict future trading in its shares so it doesn’t forfeit the tax benefits. If the bankruptcy judge approves its request, investors would no longer be permitted to trade freely when Lehman starts to implement a reorganization plan or “other court-approved transfer of assets,” it said in the filing.

A court hearing on Lehman’s request is scheduled for Feb. 10.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).




--Editors: John Pickering.



To contact the reporter on this story: Linda Sandler in New York at [phone] or [e-mail].



To contact the editor responsible for this story: David E. Rovella at [phone] or [e-mail].