Lehman Seeks Holiest (Bankruptcy) Sacrament: Confirmation

Lehman Brothers Holdings Inc. is asking a judge to sign off on its $65 billion creditor payback plan, more than three years after the investment bank collapsed into bankruptcy.

Tuesday morning’s hearing might go quickly and rather painlessly, something that can’t be said of the out-of-court machinations and compromises that led up to it. Lehman’s plan reflects not only a compromise between the creditors of its parent company and its nearly two dozen subsidiaries, but also satisfies last-minute concerns of a host of creditors from all over the world.

The plan, which Judge James Peck will be deciding on, could pay creditors up to $65 billion and gives those owed money from Lehman’s various subsidiaries larger recoveries than they would have received under its original plan, but it sets limits on how much they can claim.

Holders of senior bonds of the Lehman parent company would benefit from what should be a quicker payback, as would all creditors. Those bondholders also get some money that would be reallocated from the pool of money being paid back from the Lehman subsidiaries.

The plan has much wider support than a prior one, including from two groups that had filed competing proposals.

Lehman’s bankruptcy case is the largest in U.S. history, and so are the fees associated with it. The company’s lawyers, consultants and financial advisers have received about $1.4 billion in fees since its September 2008 bankruptcy filing.