Lehman Plans $22.5 Bln Payout to Creditors
Lehman Brothers Holdings Inc next week will begin paying out $22.5 billion to its creditors, more than it initially estimated in the first leg of its $65 billion creditor payback plan.
Lehman, which ended the largest-ever Chapter 11 bankruptcy in March, will begin making payments April 17, it said in a statement on Wednesday. That date coincides with a tentative payout schedule announced last month. The company said in the statement it is eyeing a second distribution around Sept. 30.
The $22.5 billion first distribution announced on Wednesday, much higher than Lehman’s initial minimum estimate made last month of about $10 billion, is relief for creditors who have been waiting three-and-a-half years for their money as Lehman has trudged through a messy liquidation. The firm’s collapse in September 2008 was a catalyst of the global financial crisis.
The company fought for control of its bankruptcy as multiple creditor factions, including derivatives creditors like Goldman Sachs Group Inc and bondholders led by Paulson & Co, sought to impose competing payout plans that favored their constituents.
Lehman in June proposed a plan it touted as a “global compromise,” estimating about $65 billion in total payback and giving many creditors recoveries of between 20 and 30 cents on the dollar.