• 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

  • Sbarro Pizza Chain Files Plan to Restructure and Exit Bankruptcy

    Sbarro Inc has proposed a restructuring plan that would give ownership of the chain to senior lenders. The pizza restaurant chain entered bankruptcy in early 2011.

    The plan would reduce its debt by 73 percent, or $295 million, and convert senior debt to equity, Sbarro said in a statement. The plan requires court approval to be put into action.

    “The plan gives us a clear path to emerge from the bankruptcy process with significantly reduced debt and increased financial flexibility and liquidity,” Nicholas McGrane, interim president and chief executive officer, said in the statement.

    Sbarro owns and franchises over 1,000 fast-food Italian restaurants around the world. The Sbarro family started out with a single Italian delicatessen over 50 years ago in Brooklyn, New York. The first mall location opened about a decade later.

    The company filed for bankruptcy in April, blaming reduced customer traffic at malls and increased competition from food courts. Most of the stores are located in indoor malls.

    Sbarro said it intends to hold an auction to allow bidders to make rival offers. The company said it is in talks “with a number of interested parties” that may submit competing proposals.

    Bankruptcy is an excellent tool for businesses and individuals alike to regain control of their financial situation. The process enables people to take a financial load off their shoulders and move on with their life. If bankruptcy looks like it’s in your sights, do it now. The sooner you reach discharge, the sooner you can rebuild your financial life.

    Benjamin Brand Services – Chicago bankruptcy attorney