Lehman Brothers Financial SA (LEHNQ)

[linda1]

It was due to the Guarantee Agreements and the subordination clause that the Capital Trust's distributions were reallocated to Senior Notes.


Under Substantive Consolidation the Guarantee Agreements are waived and all Creditors are treated equally.


I believe there are 22 or 23 Subsidiaries of LBHI that are in bankruptcy also and it could happen that only the Subsidiaries in the US are consolidated if it is too complicated to consolidate Subsidiaries abroad.


If Substantive Consolidation does happen it will probably be a long process figuring out which Subsidiaries to consolidate with LBHI.