(Adds Ciongoli court filing)
NEW YORK, April 27 (Reuters Legal) - Cash-strapped New York
state would receive about $144 million from Lehman Brothers
Holdings Inc under a proposed settlement resolving tax claims
against the defunct financial giant.
The payment of corporate back tax and interest would settle
claims that initially sought $1.17 billion, according to a
motion filed on Tuesday in U.S. Bankruptcy Court in Manhattan.
The state Department of Taxation and Finance filed the
claims after Lehman and several subsidiaries went bankrupt in
2008, saying the company skimped on tax payments between 1992
Lehman said the gap was due to the department's decision to
reclassify much of the company's investment capital income,
which carried a 0.5 percent tax rate, as business capital
income taxed at 6.8 percent.
The department also reclassified some of the company's
nontaxable income as attributable to Lehman units subject to
New York taxation, according to the motion.
The deal, scheduled for a May 18 approval hearing before
Judge James Peck, could provide much-needed breathing room for
a state plagued by financial woes.
New York's $10 billion budget gap forced Gov. Andrew Cuomo
to implement across-the-board cuts in his fiscal 2012 budget,
and New York City Mayor Michael Bloomberg has said the cuts
will hit the city especially hard. The mayor said he may be
forced to lay off 46,000 city teachers.
The agreement pegs Lehman's total assessment at $153
million -- $104 million in tax and $49 million in interest --
but is offset by roughly $9 million from overpayments in
Lehman's 2007 tax returns.
A spokeswoman for the taxation and finance department did
not respond to inquiries Wednesday and a representative for
Lehman said the company had no comment on Tuesday's
Tax authority claims that predate bankruptcy filings are
typically considered pre-petition claims and are generally paid
ahead of other unsecured claims, but after secured claims.
While the state might have received a larger sum had it
waited to be paid out under a restructuring plan, the
settlement allows it to get paid sooner, Jeffry Ciongoli,
Lehman's global tax director, said in a court filing.
Lehman filed the largest bankruptcy in history in September
2008, listing $639 billion in assets. Lehman Brothers Holdings,
the holding company parent of the bankrupt units, has proposed
a reorganization plan that would pay creditors about $60
billion, but the plan faces opposition from various creditor
The case is In re Lehman Brothers Holdings Inc, U.S.
Bankruptcy Court, Southern District of New York, No. 08-13555.
(Reporting by Nick Brown; editing by Howard Goller and Andre