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Lehman’s Archstone Wins Arbitration Against Investors

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Lehman’s Archstone Wins Arbitration Against Investors
Dan George helps move a friend into an Archstone apartment building in Cambridge, Massachusetts. Photographer: JB Reed/Bloomberg

Lehman Brothers Holdings Inc.’s Archstone, the defunct firm’s largest real-estate asset, won an arbitration brought by investors seeking hundreds of millions of dollars in damages.

Archstone, which Lehman acquired in a $22 billion leveraged buyout with Tishman Speyer Properties LP, has ownership interests in hundreds of apartment developments from Washington and New York to San Francisco.

Asked to decide whether Archstone breached covenants of tax agreements, an arbitration panel said it hadn’t, according to a copy of the decision e-mailed to Bloomberg today by a spokeswoman for Lehman’s law firm, Weil Gotshal & Manges LLP.

“Claimants are not owed any payments,” the panel said in the Oct. 26 decision. “Therefore there is no need to proceed to the damages phase of the arbitration.” The arbitrator appointed by the claimants dissented, the panel said.

Lehman, which has said it aims to get a $65 billion liquidation plan confirmed in court next month, said it’s trying to sell Archstone to help pay creditors. It won court approval last year to convert $2.4 billion of its secured Archstone debt into preferred equity, according to court documents.

Lehman, once the fourth-largest investment bank, listed real estate assets of $23 billion the day before its Sept. 15, 2008, bankruptcy, the largest in U.S. history. Its properties had a market value of about $14 billion nine months later, New York-based Lehman said in court papers.

Lehman’s creditors include Goldman Sachs Group Inc., UBS AG, the New York Giants and Abu Dhabi Investment Authority, as well as individuals who hold Lehman bonds.

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

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