Lehman Claims Deal, Kirch Group Trial, Saab Pay: Bankruptcy

Lehman Brothers Holdings Inc. and Danske Bank A/S agreed to reduce the Danish bank’s bankruptcy claim to $580 million and have it support Lehman’s reorganization plan.

Danske Bank in 2009 filed a $699.6 million claim against Lehman and a second claim against its commercial paper unit for same amount. The claims are related to a 2005 commercial and residential loan repurchase agreement, according to a filing in U.S. Bankruptcy Court in Manhattan. The Danish bank later filed four more claims arising from derivatives deals totaling $38.6 million.

Deutsche Bundesbank was allowed a claim of $3.5 billion and Bundesverband Deutscher Banken a $5.3 billion claim on bankrupt Lehman Brothers Holdings Inc. The parties agreed on the non-priority, senior unsecured claim in a settlement this month, Lehman said. Germany’s central bank filed a $12.2 billion claim on Lehman, based on a guarantee of debt of its German affiliate, Lehman Brothers Bankhaus AG.

Lehman Brothers International (Europe) will have a $1 billion claim on its parent company, Lehman Brothers Holdings Inc., along with a $900 million claim against the defunct firm’s special financing unit, according to a court filing. Lehman affiliates also have claims against the European company, Lehman said in the filing.

Deutsche Bank’s Kirch Meeting Didn’t Yield Result, Jentzsch Says

A 2002 meeting of Kirch Group creditor banks called by Deutsche Bank AG wasn’t unusual and didn’t yield any results, said Stefan Jentzsch, then chief risk officer at HVB Group.

The banks met to discuss how to handle 800 million euros ($1.1 billion) in funds Kirch was presumed to need through the end of that year, Jentzsch said during testimony at a Munich appeals court yesterday. The meeting took place on Feb. 14, 2002, and also discussed whether to restructure Leo Kirch’s firm to tackle the liquidity crisis, the banker said, undermining a claim there was a conspiracy to bring down Kirch Group.

“If you ask what to do with a group’s liquidity crisis, you also ask what to do with a group’s holdings,” Jentzsch said. “If you massively sell units, the liquidity situation changes.”

The meeting was scheduled 10 days after former Deutsche Bank Chief Executive Officer Rolf Breuer said on Bloomberg TV “everything that you can read and hear” is that “the financial sector isn’t prepared to provide further” loans or equity to Kirch. Within months, the media group filed for bankruptcy. Kirch sued Deutsche Bank and Breuer seeking about 3.3 billion euros in suits claiming the bank plotted his company’s demise.

Deutsche Bank and Breuer have long denied the allegations in the lawsuits, which continued after Kirch’s July death, and said Bayerische Landesbank asked Deutsche Bank to call the meeting.

Saab Auto Delays Wages Again as China Investor Talks Continue

Saab Automobile, the cash-strapped Swedish carmaker, delayed paying monthly wages for a fourth time this year while management negotiates a possible deal with two Chinese companies.

Saab was supposed to pay its 1,500 factory workers on Oct. 25, spokesman Eric Geers said yesterday by telephone. Saab has received payments from the Swedish government to cover salaries through Oct. 21, while the Trollhaettan, Sweden-based company must cover the rest of the month itself.

“Paying salaries is our absolute highest priority, so it’s not good they’re being delayed,” Geers said. “We’re looking at the full picture and aim to pay as soon as possible.”

Saab paid salaries about a week late in June and July, and the government has covered the wages since then under a scheme that expired last week.

Iceland Beating Euro Area on Default Swaps Won’t End Junk Status

Iceland can’t expect to have its credit grade lifted from junk even as debt-derivative markets show the island’s risk of default is lower than the average for the euro area, Fitch Ratings Senior Director Paul Rawkins said.

Credit default swaps on Iceland, whose banks reneged on $85 billion in debt in 2008, are trading at less than half the average for the euro area as the island emerges from its crisis with faster economic growth, smaller deficits and lower unemployment than the average for the 17 euro nations. That’s not enough to warrant an upgrade, Rawkins said. Iceland will stay junk until it shows it can fix its private sector debt burden and unwind krona controls, he said.

“The ratings aren’t driven by CDS prices,” Rawkins, who is based in London, said in an interview. Ratings outlooks “generally are meant to have a lifetime of about two years on the whole. That doesn’t necessarily mean that the next step would be up to an investment grade; it’s more likely that the next step would be up to a positive outlook.”

Iceland’s banks need to agree to “at least one more debt restructuring” with households and companies struggling to service their loans before the Atlantic island’s economy can return to “normality,” Willem H. Buiter, chief economist at Citigroup Inc, said at a conference in Reykjavik today.

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