NEW YORK/BANGALORE Lehman Brothers Holdings Inc said creditors holding more than $100 billion of claims now support its reorganization plan, moving the company closer to emerging from the largest-ever U.S. bankruptcy.
Thirty banks, hedge funds and other creditors agreed in writing to support the Chapter 11 plan filed earlier this week by what remains of the fourth-largest U.S. investment bank, Lehman LEHMQ.PK said on Friday.
Lehman said the creditors include "substantially all" supporters of two competing reorganization plans. One of those plans was backed by hedge fund firm Paulson & Co and the California Public Employees' Retirement System, the nation's largest public pension fund. The other was backed by Goldman Sachs Group Inc (GS.N) and hedge fund firm Silver Point Capital LP.
These supporters agreed not to pursue their plans so long as Lehman's plan retains enough creditor support and Lehman emerges from bankruptcy by March 31, 2012, court records show.
Bryan Marsal, Lehman's chief executive, called Lehman's plan a "fair and reasonable" compromise. Lehman hopes to distribute about $65 billion to creditors holding an estimated $322 billion of allowed claims.
"We do feel like we have sufficient creditor support to confirm the Chapter 11 plan; however, we are continuing to negotiate with remaining creditors to reach a resolution," Lori Fife, a partner at Weil Gotshal & Manges in New York who represents Lehman, said in an interview.
Fife expects the plan to be confirmed by year-end, with distributions to creditors beginning "shortly thereafter."
A CalPERS spokesman was not immediately available for comment.
Lehman filed for bankruptcy protection on September 15, 2008, with an estimated $639 billion of assets. Its filing was a major trigger for the global financial crisis.
SUPPORT FROM BANKS
Under Lehman's plan, holders of unsecured debt from the parent company would receive 21.1 cents on the dollar, while unsecured creditors of the Lehman Brothers Special Financing Inc derivatives unit would receive 27.9 cents on the dollar.
Supporters of the plan include units of Barclays Plc (BARC.L), which bought most of Lehman's investment bank but has battled Lehman in court over billions of dollars of assets.
Other supporters include Deutsche Bank AG (DBKGn.DE), Royal Bank of Scotland Group Plc (RBS.L), French bank Societe Generale (SOGN.PA), and units of Credit Suisse Group AG (CSGN.VX) and Morgan Stanley (MS.N), court documents show.
Lehman said it has also reached accords with seven of 13 institutions with derivatives claims, and expects to enter an agreement with another bank with $9.6 billion of such claims.
U.S. Bankruptcy Judge James Peck in Manhattan must approve any reorganization plan. A hearing to authorize submitting Lehman's plan to creditors for a vote is set for August 30.
The case is In re: Lehman Brothers Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.
(Reporting by Tanya Agrawal in Bangalore and Jonathan Stempel in New York; Editing by Savio D'Souza and John Wallace)