Goldman joins disclosure fight over Lehman claims

Fri Jun 10, 2011 1:10pm EDT

* Goldman, others fight to control Lehman's repayment

* Says should not be required to share details on claims

* Bondholders say everyone should follow uniform standards

By Nick Brown

NEW YORK, June 10 (Reuters) - Goldman Sachs Group Inc (GS.N) and other banks fighting for control of Lehman Brothers Holdings Inc's LEHMQ.PK bankruptcy have joined efforts to avoid sharing information about claims against the failed investment bank.

In court papers filed Friday in U.S. Bankruptcy Court in Manhattan, units of Goldman, Morgan Stanley (MS.N), Deutsche Bank AG (DBKGn.DE) and others said a proposal by a group of Lehman bondholders would go "far beyond" bankruptcy rules.

The banks are part of a group proposing a plan to divvy up about $60 billion in the Lehman estate to pay back creditors of the company, which filed the biggest bankruptcy in U.S. history in September 2008. The bondholders, an ad hoc group led by hedge fund Paulson & Co, have filed a competing plan that would yield lower returns for the banks.

The bondholders in April were ordered by Judge James Peck, who oversees the bankruptcy, to disclose key points about their roughly $20 billion in claims, including the price paid for those claims. An analysis by the Wall Street Journal found that Paulson's fund, which bought its Lehman debt at a steep discount, could make profits of $350 million to $726 million from the bankruptcy.

The bondholders said all parties should be required to meet the same disclosure requirements, proposing in May a uniform standard for anyone trying to influence Lehman's payback plan.

But creditors were quick to object, saying insolvency rules require broader disclosure from committees than individual creditors.

Among the more than 15 parties who have opposed the disclosures are Bank of America Corp (BAC.N), Barclays Plc (BARC.L) and the Royal Bank of Canada (RY.TO). [ID:nN09257003]

The latest objections may prove central to the dispute because the Goldman group is a direct competitor to the bondholders in efforts to control Lehman's restructuring.

The group has argued that it is loosely affiliated and that its members have separate attorneys, barring it from committee status under disclosure rules.

But if disclosure rules do not encompass the banks, other parts of the bankruptcy code should, the bondholders argue. For example, a statutory provision allowing judges broad power to issue orders should be liberally interpreted to give Peck the power to demand disclosures, they say.

The Goldman group said "burdensome" disclosure is unnecessary and would discourage creditors from seeking a say in Lehman's reorganization.

"Even if some minimal benefit could be articulated, it would be completely outweighed by the chilling effect," the banks said in Friday's filing.

Other members of the group to sign on to the objection include Credit Agricole CIB, Credit Suisse International and the Royal Bank of Scotland PLC. Investment funds including Angelo Gordon & Co LP and Serengeti Asset Management LP filed court papers Friday supporting the banks' objection.

A Goldman representative and a company attorney were not immediately available for comment.

Attorneys for Morgan Stanley and Deutsche Bank also were not immediately available. A lawyer for Credit Suisse declined to comment, as did a spokesman for the bondholders.

The matter is set for hearing before Judge Peck on June 15.

The case is In re Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.