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Lehman Brothers Holdings Settling with JP Morgan and Reemerging as Asset Management Firm “Lamco” from World’s Largest Chapter 11

Interesting series of news this week around Lehman brothers Holdings – they are looking to reemerge from Chapter 11 and settle a fight with JP Morgan in the coming weeks. In the JPMorgan settlement, they will take back $9 billion in illiquid securities and real estate in exchange for cash and collateral. According to a BusinessWeek article, the judge responsible for mediation suggested “that the purpose of the deal with JPMorgan, which would saddle Lehman with billions of dollars in illiquid securities, might be ‘to prime the pump of Lamco.’”


“Lehman’s plan involves the creation of Lamco, a subsidiary that would serve as an asset-management adviser for the estate. It would oversee the commercial real estate, residential mortgages, private equity and other remaining assets and sell them off to generate proceeds for Lehman creditors.”* Sources seem to indicate that Lehman Brothers Holdings has $30 to $40 billion USD (depending on JPMorgan settlement) to spin off into Lamco. Other sources suggest Lamco is soliciting third-party assets to manage for a fee and is also seeking outside investors for Lamco. Are we witnessing a Pheonix rising from the ashes?

“According to the 93-page plan, filed Monday by Lehman's lead bankruptcy lawyers at Weil, Gotshal & Manges, Lamco will manage real estate, private equity, and derivatives assets held by the defunct investment bank in order to sell them off at a premium to generate proceeds for Lehman creditors.”**

Sources:
*http://dealbook.blogs.nytimes.com/2010/03/15/lehman-bankruptcy-estate-proposes-reorganization-plan/
**http://amlawdaily.typepad.com/amlawdaily/2010/03/lehmanreorg.html


This post first appeared on Circular Number 6, please read the originial post: here

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Lehman Brothers Holdings Settling with JP Morgan and Reemerging as Asset Management Firm “Lamco” from World’s Largest Chapter 11

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