The team winding down Lehman Brothers Holdings Inc. said Thursday it would be paying $1.6 billion to creditors next week, more than seven-and-a-half years after the investment bank's collapse triggered the financial crisis.
The payout, the ninth since the investment failed, will bring the total payout in the firm's bankruptcy to approximately $106.9 billion. The bulk of the cash?$78.5 billion?has gone to pay so-called third-party, or non-Lehman claims.
Most the latest payout, some $1.3 billion, is also earmarked for non-Lehman creditors and is slated to be made March 31.
In a filing Thursday in U.S. Bankruptcy Court in New York, Lehman, which is in liquidation, said its general unsecured creditors, who were estimated to receive less than 20 cents on the dollar when Lehman's bankruptcy plan went into effect in early 2012, will have received more than $100 billion, or more than 35 cents on the dollar, after the next distribution is completed.
The chapter 11 payment plan for Lehman treats similarly situated creditors of its subsidiaries better than those of the parent. General unsecured creditors of Lehman's commodities unit, for example, will have received about 77 cents on the dollar following the latest distribution.
Those holding bonds issued by Lehman Brothers' parent company have now recovered more than 37 cents on the dollar, up from an estimated 21.1 cents when Lehman's plan went into effect in 2012.
The boost in recoveries, Lehman has previously said, has come from gains in the estate's real-estate, derivatives and private-equity investments.
Lehman, once the nation's fourth-largest investment bank, collapsed into the largest bankruptcy ever in September 2008 and its U.S. brokerage business was quickly sold off to Barclays PLC.
After the bank failed, some creditors bailed out, not wanting to wait for their money or to take a chance they wouldn't get paid at all. Hedge funds were willing buyers of their claims at steep discount, betting they would gain in value after the initial panic subsided.
That bet has become quite fruitful. Since the bankruptcy, Lehman has consistently increased estimates of how much creditors would get back, helping hedge-fund managers such as Paulson & Co. and Elliott Management Corp. rake in profits.
A team of bankruptcy professionals, under the direction of turnaround firm Alvarez & Marsal managed the New York holding company's assets until Lehman's exit from bankruptcy in 2012, when a reorganized company emerged, overseen by a new board of directors.
Because Lehman still has billions in remaining investments to unwind and more money to pay creditors, the bank is expected to exist in some form for several more years. Lehman plans to make a 10th distribution at the end of September.
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