The agreement resolves over USD$20bn of intercompany claims Lehman Hong Kong Entities Agree to support LBHI's Pay-out Plan for Creditors
Lehman Brothers Holdings Inc. (LBHI) and the Liquidators for Lehman Hong Kong, one of the largest groups of LBHI's international affiliates, have reached an agreement settling all intercompany claims between the U.S. Debtors and Lehman Hong Kong.
The agreement, which is subject to approval in the U.S. Chapter 11 and Hong Kong proceedings later this year, settles over $20 billion of complex intercompany relationships between LBHI's U.S. debtors and nine Hong Kong entities in liquidation.
LBHI has also secured the support of Lehman Hong Kong for its Second Amended Joint Chapter 11 Plan and Disclosure Statement. The Liquidators of Lehman's Hong Kong entities now join the Unsecured Creditors Committee and other creditor groups representing over $100 billion in claims in support of LBHI's plan.
Edward Middleton, Partner, KPMG China, and one of the Hong Kong Liquidators, said: "This is a genuinely exciting development. It is a quantum leap in the progress of the Hong Kong liquidations, and I am sure will assist our colleagues in the U.S. as well. The settlement, achieved without litigation, provides mechanics that will cut through many of the complexities of our multi-layered relationships, and will thereby materially speed up the liquidations, which can only be of benefit to our creditors."
Daniel Ehrmann, LBHI's head of international operations and co-head of derivatives and a managing director at restructuring and professional services firm Alvarez & Marsal, said: "This agreement is another milestone in the case - it resolves more than $20 billion of intercompany claims and contributes significantly to LBHI's recoveries. As we have consistently stated, we remain focused on negotiating settlements with our international affiliates and to bringing the Estate's plan to a vote and confirmation by year end."
The Lehman Brothers bankruptcy is the largest and most complex in history. Before the bankruptcy, Lehman Brothers had over $630 billion of assets on its balance sheet and operated as a truly global firm with over 7,000 legal entities in more than 40 countries. Its global cash management system, organizational structure, product lines and operating platforms resulted in numerous cross-border and cross-entity interdependencies.
Lehman's insolvency has resulted in over 75 separate and distinct bankruptcy proceedings, with the non-United States proceedings managed by a number of court appointed administrators, liquidators, trustees, receivers, and like office holders.
LBHI and its affiliated chapter 11 debtors, through their restructuring advisers at Alvarez & Marsal and their attorneys at Weil, Gotshal & Manges LLP, filed the Second Amended Joint Chapter 11 Plan and Disclosure Statement with the United States Bankruptcy Court for the Southern District of New York on June 28, 2011.
These filings can be found at www.lehman-docket.com in the key documents section. To date, more than 30 creditor groups representing claims of over $100 billion have signed plan support agreements. The U.S. Chapter 11 debtors will be seeking the Bankruptcy Court's approval of the Plan and Disclosure Statement at a hearing scheduled to be held on August 30, 2011.
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