NEW YORK - (Mealey's) Lehman Brothers Holding Co. Inc. on
Feb. 28 agreed to a $1 billion settlement that resolves $2.3 billion in claims
brought by the closed bank's affiliates based in Bermuda, according to a brief
the bank filed in a New York bankruptcy court (In re: Lehman Brothers
Holding Inc. et al, No. 08-13555, Chapter 11, S.D. Bkcy.; See February
2012, Page 6).
In the motion for approval of the settlement filed in the
bank's Chapter 11 case in the U.S. Bankruptcy Court for the Southern District
of New York, Lehman Brothers said the settlement resolves all claims between
the bank's U.S.-based affiliates and Lehman Re Ltd., its subsidiary Congress
Life Insurance Co. and its creditor Pulsar Re Ltd. Lehman Re, Congress
Life and Pulsar are Bermuda-based.
"In the Debtors' judgment, the Settlement Agreement
provides for a fair and final resolution of all outstanding disputes and claims
between their estates, Lehman Re, and certain of Lehman Re's largest
creditors," Lehman Brothers said. "The Debtors submit that the Settlement
Agreement is fair and reasonable, in the best interests of their estates, and
should be approved."
The settlement agreement resolves the claims asserted by
Lehman Re against Lehman Brothers arising primarily from two prepetition
agreements: a master repurchase agreement dated July 9, 1999, between,
among others, Lehman Commercial Paper Inc. (LCPI) and Lehman Re, in which LCPI
committed to sell to Lehman Re, and later repurchase, residential and
commercial mortgage and mezzanine loans; and the net worth maintenance
agreement between Lehman Brothers and Lehman Re dated Oct. 26,
Under the settlement, Lehman Re will hold $490 million in
allowed claims against LCPI and $415 in allowed claims against Lehman Brothers
stemming from the two prepetition agreements.
Lehman Brothers filed the largest bankruptcy in U.S. history in
Lehman Brothers is represented by Richard P. Krasnow of
Weil, Gotshal & Manges in New
York. Lehman Re is represented by James H.M.
Sprayregen of Kirkland Ellis in Chicago.
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