Lehman Has $15 Billion Disputed Claim on Brokerage Unit

Lehman Brothers Holdings Inc., which planned a second payment to creditors of $10.2 billion on Oct. 1, said its largest claim on an affiliate is $15.2 billion owed by its defunct brokerage.

Lehman had cash of $8.3 billion as of June 30, plus restricted cash of $13.6 billion, including money set aside for disputed claims and debts, the company said today in a regulatory filing. It was owed $45.2 billion by affiliates, including the $15.2 billion claimed from the Lehman Brothers Inc. brokerage and $14.3 billion owed by a Swiss affiliate, Lehman Brothers Finance. The final amounts of both claims are being negotiated.

Separately, the brokerage, which has yet to pay hedge funds and banks after four years in liquidation, has said it is closer to making a payment after settling two other large affiliate claims.

The Lehman parent, which continues to liquidate assets to pay creditors after emerging from bankruptcy, had $18.9 billion of investments and inventory on June 30, including commercial real estate and loans of about $12 billion, according to the filing with the U.S. Securities and Exchange Commission. Principal investments were $4.3 billion, including an equity stake in Neuberger Berman, which the money management firm is buying back.

New Board

Overseen by a new board since leaving bankruptcy in March, the defunct investment bank plans semi-annual distributions, including a third distribution around March 30. Its first payment totaled $22.5 billion.

Lehman has said it intends to raise $53 billion through 2016 or so, to pay an average of 18 cents on the dollar on final claims of $300 billion. The company filed the biggest U.S. bankruptcy ever in September 2008, listing debt of $613 billion. The brokerage went into liquidation separately soon after.

Lehman, run by Chief Executive Officer Richard Fuld when its collapse helped bring on the worst economic slump since the Great Depression, settled a fight with creditors in a payment plan that allotted more money to derivatives claimants including Goldman Sachs Group Inc. (GS) and less to bondholders such as Paulson & Co. Both groups proposed rival plans to pay Lehman’s debt.

Lehman failed because of too much debt and risky real estate investments, according to a bankruptcy examiner’s report.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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