Trustee for Lehman Bankruptcy Hopes to Pay Customers in Full

The bankruptcy trustee winding down Lehman Brothers Holdings Inc's brokerage wants to repay customers what they're owed in full. However, he is expecting a shortfall in paying back $47.5 billion owed to creditors.

The bulk of brokerage Lehman Brothers Inc's $20.6 billion in assets will probably go to customers, James Kobak, a lawyer for trustee James Giddens said.

Customers have asserted a $12 billion in allowed claims and another $43 billion in unresolved claims, Kobak said at the trustee's "State of the Estate" address in U.S. Bankruptcy Court in Manhattan. Giddens has said he believes the bulk of the unresolved amount will be found invalid.

A majority of the unresolved claims come from Lehman affiliates, including $17 billion from broker-dealer Lehman Brothers International Europe and $8 billion from the parent Lehman company.

Giddens told the court he hoped to make at least partial payouts to net equity customers by March or April, adding that key customer claims disputes will be hashed out in court soon. Judge James Peck feels a dispute with the European portion of Lehman could hamper the estate's ability to pay creditors.

The dispute is over Lehman Brothers International Europe's $8.3 billion "house" claim over money the brokerage holds. The issue concerns whether money held on behalf of foreign affiliates can be considered customer money. If the claim is allowed, it could eat up a large portion of the brokerage's resources for repaying customers.

Benjamin Brand Services – Chicago bankruptcy lawyer

Start Your Questionnaire

How may we help you?

Schedule an appointment today.

Why Choose Us?

  • You can meet with an experienced law Partner in the Firm not some associate.
  • We concentrate in foreclosure defense and bankruptcy so we have more options to offer you then other attorneys
  • We also represent individuals in Chapter 11's that offer better loan workout and restructuring options then Chapter 13 and most bankruptcy lawyers do not know how to do it.
  • We offer a free no obligation consultation where we will discuss your option or options, tell you the pros and cons of each one, the fees and costs and help you make an informed decision. There can be more then one solution!
  • We offer affordable payment plans and fixed fees in most cases.