Hedge Funds Battle Lehman Bankruptcy Plan

Jun 30 2010 | 12:46pm ET

A phalanx of hedge funds led by Paulson & Co. is crying foul over Lehman Brothers Holdings’ bankruptcy plan, saying that it treats some creditors unfairly and will lead to years of litigation.

The dozen creditors, which include the California Public Employees’ Retirement System, Legg Mason’s Western Asset Management division, and San Mateo County, Calif., called the Chapter 11 plan “seriously flawed,” warning that it “establishes a ‘pot’ of assets for distribution and pits creditors of various estates against each other,” virtually guaranteeing a steady flow of unnecessary lawsuits and delay the recovery of assets.

Under Lehman’s proposal, some unsecured creditors would get as much as 44.2 cents on the dollar, with general unsecured creditors getting 14.7 cents and some getting just 10.4 cents. The plan favors creditors of Lehman’s derivates and commercial paper units.

The hedge fund creditors want those figures made closer to even.

The Paulson-CalPERS group filed their objections in Manhattan bankruptcy court yesterday. The group also includes hedge funds Canyon Capital Advisors, Fir Tree Partners, Fortress Investment Group, Gruss Asset Management, King Street Capital Management, Owl Creek Asset Management and Taconic Capital Advisors. All told, the twelve creditors claim to hold $15.5 billion in Lehman debt.


In Depth

Q&A: Old Hill's Stone On Private Debt, P2P And Credit Bubbles

Jun 6 2017 | 7:52pm ET

While institutional capital continues to flow into the broader private debt sector...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: Asia-Focused Hedge Funds Offer Great Opportunities

Jun 23 2017 | 3:33pm ET

Emerging market strategies have outperformed their developed-market peers for five...

 
Error

From the current issue of