* New plan from Paulson-led group seeks higher recovery
* Three competing plans to go before bankruptcy judge
(Adds details on bondholders' plan, quotes from court papers)
By Nick Brown
NEW YORK, April 28 Bondholders fighting for
control of Lehman Brothers Holdings Inc's LEHMQ.PK repayment
plan have amended a proposal for the company's restructuring
that would provide them a slightly higher recovery.
The bondholder group, led by hedge fund Paulson & Co and
the California Public Employees Retirement System, filed the
plan late on Wednesday in U.S. Bankruptcy Court in Manhattan.
The updated filing, which would allow 25.4 percent recovery
for unsecured creditors, follows an initial proposal in
December that called for recoupment of about 24.5 percent.
The new plan accounts for increases in the valuation of
Lehman's assets, and would also raise payouts proportionately
for other classes of creditors. The updated valuation figures
also could ward off potential challenges from opponents who
might question whether the numbers are current.
Lehman filed the largest bankruptcy in history in September
2008, listing $639 billion in assets. The failed investment
bank estimates creditors will recover about $60 billion of the
$322 billion in allowed claims against the company.
Lehman has filed its own plan, while a group of derivatives
creditors has filed a third proposal.
Parties face a Friday deadline to submit or amend plan
proposals in time for inclusion in a June 28 approval hearing.
If approved by Judge James Peck, the plans would be sent to
creditors for a vote.
The Paulson group has asserted nearly $20 billion in claims
against Lehman entities.
The derivatives group, led by Goldman Sachs Group Inc
(GS.N) and Silver Point Capital LP, is backing a competing plan
that would boost recoveries for creditors of Lehman's
derivatives business and reduce payouts for bondholders.
Lehman touts its own plan as a compromise that would allow
bondholders to recover about 21.4 cents on the dollar.
But the Paulson group says Lehman's plan cannot be trusted,
arguing its bookkeeping is tainted by questionable accounting
practices known as Repo 105 transactions.
Through Repo 105, Lehman classified short-term loans as
sales so that it could temporarily take as much as $50 billion
off its balance sheet. A court-appointed examiner studying
Lehman's descent into bankruptcy concluded last year that the
financial firm could have grounds for a lawsuit against its
former executives over the transactions.
"Any plan ... that purports to accept Lehman's books and
records presents significant legal and equitable problems," the
Paulson group said in its plan outline filed in court.
Paulson's plan calls for combining all of Lehman's assets
into one asset pool, an approach that the Goldman group
opposes, saying it has no legal basis.
Because consolidation merges a company's strongest and
weakest assets, creditors of weak entities tend to favor it,
while claimholders of healthier units tend to oppose it.
The Paulson group declined to comment. A spokesman for
Silver Point could not immediately be reached.
The case is In re Lehman Brothers Holdings Inc, U.S.
Bankruptcy Court, Southern District of New York, No. 08-13555.
(Editing by Dave Zimmerman)