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Sunday, February 05, 2012 5:45:28 PM
The main thing about the subordination is that it benefits the senior notes holders and the estate.
By not canceling the CTs, there is no write off/down on NOLs to the estate and the way they effect seniors, is that any distribution that were directed to CTs, are then taken away and re-distributed to senior note holders. By doing this, the senior note holders get more of a return/recovery then the other creditors in the same tier or non subordinated claims/debt and CTs still with nothing because of subordination.
At this point, Lehman's seniors/creditors are expected to receive between 21%/27% recovery of face. Until it is paid in full of the allowed claims, then it will trickle down to CTs.
Bottom line: If your main contention of this being cancelled after the effective date, then I would put that to slim to none.
Risk is very high since seniors, even after taking CTs distribution is still only at 21/27% recovery of face, which these waaayyy out of the money.
Do not trade on any of my posts.
imo
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