Lehman Preferred Series "J" Preferred (fka LEHJQ)

[justincase]

Can someone that follows this explain what this means?
Thanks in advance.

http://www.bloomberg.com/news/2010-10-21/lehman-bankruptcy-judge-says-he-never-approved-final-barclays-sale-papers.html

Print Back to story Lehman Judge Says He Never Approved Final Documents in Sale of Brokerage
By Linda Sandler - Oct 21, 2010 U.S. Bankruptcy Judge James Peck said he never approved final documents for the sale of bankrupt Lehman Brothers Holdings Inc.’s brokerage to Barclays Plc.

“Let me be clear about one thing, Mr. Boies,” Peck told Barclays’ lawyer David Boies. “I never approved the clarification letter.”

Peck had interrupted Boies as he began closing arguments in the $11 billion trial. The lawyer said the judge had no legal basis for reopening his own sale order because all details of the deal were known at the time. That included a so-called clarification letter allocating extra assets to Barclays.

“No hearings took place in this court to approve the clarification letter,” Peck said, noting the document was one of about 12,000 filed in the Lehman bankruptcy. Peck didn’t indicate what effect his statement would have on the details of the brokerage sale. Peck may make a final ruling in January or February, lawyers in the case have said.

Lehman, which accuses Barclays of making an $11 billion “windfall” when it bought the brokerage in the 2008 financial crisis, is trying to convince Peck that he has grounds for overturning his own order approving the sale.

Kimberly Macleod, a Lehman spokeswoman, and Michael O’Looney, a Barclays spokesman, declined to comment.

Legal Theory

“On one legal theory or another Judge Peck could rule that the clarification letter was never formally approved by the court and therefore is not protected by his sale orders,” said Chip Bowles, a bankruptcy lawyer at Greenebaum Doll & McDonald PLLC in Louisville, Kentucky. “Far more likely would be partially denying part of Barclays’s turnover motion and only giving Barclays a portion of the assets they are seeking.”

The battle pits bankrupt Lehman, which examiner Anton Valukas said hid billions of dollars in risks before it failed, against Barclays, the sole bidder for the brokerage.

Earlier, Robert Gaffey of Jones Day, Lehman’s litigator, said the law is on Lehman’s side. Grounds for Peck to revise his own sale order include mistakes or misrepresentation that may be innocent, he told the judge.

Peck is presiding over three lawsuits against Barclays, including one by the Lehman brokerage’s trustee, James Giddens, and one by creditors.

Creditors

Any money Peck awards Lehman would help its creditors, who stand to get 15.8 cents on the dollar on average, and hurt shareholders of Barclays, which reported net income of 2.4 billion pounds ($3.8 billion) in the first half.

Peck, a 65-year-old native New Yorker, was the Manhattan court’s second most-junior bankruptcy judge in September 2008 when he was randomly assigned the $639 billion Lehman bankruptcy, the biggest in U.S. history.

His Sept. 19, 2008, order approving the brokerage sale was signed four days after the 158-year-old bank collapsed. The order was encouraged by the U.S. Securities and Exchange Commission and the Federal Reserve Bank of New York, which were seeking to calm global securities markets spooked by the bankruptcy, according to court testimony.

Peck’s order allowed Lehman’s and Barclays’ lawyers to change any documents he had approved, or add documents that weren’t finished yet, though he said the changes shouldn’t “have a material adverse effect on the debtors’ estates” and should be approved by Lehman, its creditors and Barclays.

Since April

In the trial, which has been going on since April, Lehman accuses Barclays of taking a $5 billion “secret” profit on a portfolio of securities it acquired with the brokerage, and of making another $6 billion by writing up business assets, skimping on promised payments and “grabbing” more financial assets belonging to Lehman.

Some of the disputed assets were assigned to Barclays in a so-called clarification letter that was filed in court on Sept. 22, 2008, two days after Peck approved the sale.

Barclays says it wants $3 billion of assets that were never delivered. Lehman has no legal right to challenge the transaction now because its advisers knew and documented all the details when the deal was struck, and defended it in a higher court when it was challenged, according to Barclays.

Peck will be reluctant to overturn his entire sale order for “bankruptcy policy reasons,” said Bowles. So-called 363 sales, which helped the former General Motors Corp. and Chrysler LLC to reorganize in bankruptcy and created jobs for 10,000 Lehman employees at Barclays, normally are considered final in the courts, he said.

Under Peck, the two-year case has cost Lehman creditors $1 billion in fees to managers and advisers, the most expensive bankruptcy ever. Briefs summarizing each side’s evidence are due in late November.

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

To contact the reporters on this story: Linda Sandler in New York at [e-mail];

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