LBHI's TRuPS and the UK's ECAPS are an affiliate of JPMCB. Debtors cost = $6 Billion!
It would require around $6 Billion to pay just the UK ECAPS ($2.251 Billion principal) and CTs/LBHI TRuPS ($1.2 Billion principal) principal and back interest. The Debtors probably do not expect future recoveries to be $6 Billion out to December 6, 2020, unless the Debtors cut a deal. The ECAPS preferred stock substitution scheme is a way for the Debtors to reduce the cash drain from the UK Estate and redirect the cash to LBHI's creditors.
The Debtors could go back on any deal cut for the ECAPS (including a wind-down of LBHI), unless the UK Financial Conduct Authority require the Debtors to fund the LBHI Equity Plan Trust.
The best solution (win/win) is for the Debtors to pay LBHI's TRuPS and the UK's ECAPS back interest being that LBHI is not going to wind-down (?).
***
LBHI's and JPMCB's SETTLEMENT AGREEMENT DATED 2/1/2017 - Docket 54683 - should include LBHI's TRuPS and the UK's ECAPS per "Unaffected Matters." Also, the Guarantee Resolution should apply to LBHI's TRuPS.
“Unaffected Matters” means claims filed by or on behalf of any JPMorgan Entity or any affiliates or funds of a JPMorgan Entity, or in which any JPMorgan Entity or any affiliates or funds of a JPMorgan Entity has an interest, that are not Settled Matters, including without limitation claims filed by or on behalf of a JPMorgan Entity as agent, for a customer or for a fund that it manages, claims relating to Canary Wharf, claims held from time to time by a JPMorgan Entity’s distressed claims trading desk, and any other claims that JPMorgan did not assert were covered by LBHI’s August and September 2008 guaranties and security agreements in favor of JPMCB’s subsidiaries and affiliates.
For the avoidance of doubt, claims relating to the LBSF Action are not Unaffected Matters. Lehman reserves all objections and defenses to the Unaffected Matters."
*** I reviewed this documentation last night:
LBHI's TRuPS are governed by, and construed in accordance with, English law?
a) Major prospectus language: "on a parity with any guarantee now or hereafter entered into by Lehman Brothers Holdings in respect of any preferred securities of any affiliate of Lehman Brothers Holdings,"
b)Statement 1 created as early as March 2003:
"on a parity with the most senior preferred or preference stock now or hereafter issued by Lehman Brothers Holdings and with any guarantee now or hereafter entered into by Lehman Brothers Holdings in respect of any preferred securities of any affiliate of Lehman Brothers Holdings, and"
c) Statement 2 created in March 2005:
"Governing Law: The Limited Partnership Agreement establishing the Issuer, the Preferred Securities and the Subordinated Guarantee will be governed by, and construed in accordance with, English law."
**** Statement from LEHNQ 52520X208 Lehman Brothers Holdings Capital Trust VI Prospectus
"The guarantee will constitute an unsecured obligation of Lehman Brothers Holdings and will rank:
on a parity with the most senior preferred or preference stock now or hereafter issued by Lehman Brothers Holdings and with any guarantee now or hereafter entered into by Lehman Brothers Holdings in respect of any preferred securities of any affiliate of Lehman Brothers Holdings, and "
"LEHMAN BROTHERS UK CAPITAL FUNDING LP (a limited partnership organised under the laws of England and Wales) ¤225,000,000 Fixed Rate to CMS-Linked Guaranteed Non-voting Non-cumulative Perpetual Preferred Securities having the benefit of a subordinated guarantee of LEHMAN BROTHERS HOLDINGS PLC (incorporated with limited liability in England and Wales with registered number 1854685) Issue Price: ¤1,000 Per Preferred Security The ¤225,000,000 Fixed Rate to CMS-Linked Guaranteed Non-voting Non-cumulative Perpetual Preferred Securities (the “Preferred Securities”), each with a liquidation preference of ¤1,000, comprising limited partnership interests in Lehman Brothers UK Capital Funding LP (the “Issuer”), are proposed to be issued on 30th March, 2005 (the “Closing Date”). . . . Ranking of the Preferred Securities: The Preferred Securities, together with the Subordinated Guarantee, are intended to provide Holders with rights on liquidation equivalent to non-cumulative preference shares of the Guarantor, whether or not issued. Claims under the Preferred Securities in respect of any Liquidation Distributions will rank: (i) senior to the rights of the General Partner and the Preferential Limited Partner in respect of other partnership interests issued by the Issuer; and (ii) junior to the claims of creditors of the Issuer (if any). Rights upon Liquidation: In the event of the dissolution of the Issuer, Holders will be entitled to receive, subject as set out below, for each Preferred Security a Liquidation Distribution out of the assets of the Issuer legally available for distribution. LBHI has undertaken that, so long as any of the Preferred Securities is outstanding: (a) unless a Trigger Event occurs or LBHI is being wound up, LBHI will not take any action that would or might cause, the liquidation, dissolution or winding-up of the General Partner or the Issuer otherwise than with the prior written approval of any relevant Supervisory Authority (if required at such time); and (b) the General Partner will at all times be a directly or indirectly wholly owned Subsidiary of LBHI unless (I) otherwise approved by Holders in accordance with the procedure set out in the Limited Partnership Agreement or (II) after a substitution of the Preferred Securities for depositary shares representing Substituted Preferred Stock has occurred. . . . Form of the Preferred Securities: The Preferred Securities will be in registered form. On or about the Closing Date, a single global certificate (the “Global Certificate”) in respect of the Preferred Securities will be deposited with JPMorgan Chase Bank N.A., London Branch (the “Common Depositary”) as common depositary for Euroclear Bank SA./N.V. as operator of the Euroclear System (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). Such certificate will be issued, and the Preferred Securities will be registered, in the name of Chase Nominees Limited (the “Initial Limited Partner”) as nominee of the Common Depositary.For so long as the Preferred Securities are deposited and registered as described above, book-entry interests in the Preferred Securities will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream, Luxembourg. Definitive certificates will not be made available to Holders other than in certain limited circumstances. See “Summary of Provisions Relating to the Preferred Securities in Global Form”. . . . Governing Law: The Limited Partnership Agreement establishing the Issuer, the Preferred Securities and the Subordinated Guarantee will be governed by, and construed in accordance with, English law."
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