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NEW YORK, Oct 16 (Reuters) - Lehman Brothers Holdings Inc LEHMQ.PK is the focus of three grand jury investigations, the Lehman bankruptcy attorney Harvey Miller told a court in a hearing on Thursday.
The U.S. attorney’s offices in the Eastern and Southern districts of NY, and in the district of New Jersey are handling the probes, Miller said at the hearing in the Bankruptcy Court for the Southern District of New York.
Some 12 people are already subpoenaed in Lehman probes, said the attorney.
Miller’s remarks were part of a status update in U.S. bankruptcy court in Manhattan on Thursday, where Miller detailed how the firm has been trying to sort out its affairs since its collapse last month.
The investment firm filed for Chapter 11 bankruptcy protection on Sept. 15, in the largest-ever U.S. bankruptcy filing.
Miller also disputed a claim from the administrator of Lehman’s European unit that $8 billion was transferred out of the Lehman Brothers International (Europe) unit to the U.S. unit on the eve of Lehman’s bankruptcy filing.
He said rather, that when the bankruptcy and administration proceedings began, the firm’s accounts went into lock-down, and transactions scheduled to be completed on Sep. 15, could not take place. Lehman’s books now show that the U.S. unit owes the European unit $2 billion to $3 billion and the European unit owes the U.S. unit more than $8 billion, Miller said.
SORTING OUT “CHAOS”
The dispute over the $8 billion served to illustrate how Lehman’s bankrupt parent company is working to reconstruct the pieces of a business that abruptly stopped functioning.
“This is really an atypical case, a case without any preplanning, a case with a high level of chaos in the first week,” Miller told the court.
Lehman sold its core U.S. assets to Barclays last month, and and Japan's largest broker Nomura Holdings 8604.T has said it will buy the Indian back office-units of the collapsed investment bank, as well as the company's franchises in the Asia Pacific region, among other operations.
Miller said the number of original Lehman employees now working at the legacy company number just 164 people, primarily in the legal and treasury departments.
The firm has hired restructuring firm Alvarez & Marsal, which currently has more than 100 employees working on the case. That number is expected to swell to more than 400, Miller said, with many of the additions expected to focus on unwinding the firm’s derivatives contracts.
The firm is working to unwind approximately 1.5 million derivative transactions involving about 8,000 counterparties, Miller said.
Lehman has received thousands of information requests from trading counterparties, but is still working to locate and sort through data related to many of those trades, Miller said.
“In 45 to 60 days we should be in a position where we can answer specific inquiries,” Miller told the court.
Reporting by Emily Chasan, additional reporting by Chelsea Emery
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