Lehman Sells $4.2 Billion of Broker Claims for $1.9 Bln

Lehman Brothers Holdings Inc., which is gathering money for its next payment to creditors, said it received bids of almost $1.9 billion at an auction for $4.2 billion of claims on its defunct brokerage, Lehman Brothers Inc.

The rights to money from the brokerage arose from a settlement that won court approval last month, and hasn’t yet been completed, Lehman said in a statement today. The former investment bank has said it aimed to sell a total of $14 billion in unsecured claims against its brokerage affiliate.

In addition to the unsecured claims, valued by bidders at 44.5 cents on the dollar, the accord provided the parent company with $2.3 billion in customer claims on the brokerage, Lehman has said. The brokerage trustee has said he has enough money to pay customers in full.

Lehman, which is still liquidating after exiting bankruptcy court protection last year, made a third payment to creditors on April 4.

Under an agreement disclosed in February, and following the outlines of a deal struck in October, the brokerage allowed the parent to claim about $16.3 billion and granted affiliate Lehman Brothers International Europe a $7.5 billion customer claim and a $4 billion general estate claim.

Lehman failed in September 2008, filing the biggest bankruptcy in U.S. history, because of too much debt and risky real estate investments, according to an examiner’s report.

The main 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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