Replies to post #116182 on Lehman Brothers Financial SA (LEHNQ)

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What is the most efficient value that a Trustee can distribute in a chapter 11 bankruptcy to investors?



+5
The most efficient value a Trustee can distribute in a Chapter 11 bankruptcy is often cash or highly liquid "take-back paper" (new debt or equity). This maximizes value by avoiding the costs of holding, managing, or selling distressed, illiquid assets.
www.premierbankruptcylawyers.com
www.premierbankruptcylawyers.com
+4
Cash Distribution: Considered the highest efficiency as it allows investors to immediately redeploy capital.
Post-Bankruptcy Trusts: Frequently used for efficient distribution of non-liquid assets, reducing ongoing administrative costs, professional fees, and U.S. Trustee fees.
Reorganization vs. Liquidation: Efficient plans focus on quick, high-value asset monetization, often utilizing a liquidating trust to handle remaining assets post-confirmation.
Average Recoveries: While high-risk opportunities can offer up to 500%–1000% returns for distressed investors, average recovery rates are significantly lower (68% for first lien, 35% for unsecured debt).
www.premierbankruptcylawyers.com
www.premierbankruptcylawyers.com
+3
The goal of a Trustee is to maximize the value of the estate by acting as a fiduciary, often functioning similarly to a chief executive officer to preserve asset value for investors.
Patterson Belknap Webb & Tyler LLP
Patterson Belknap Webb & Tyler LLP