Bloomberg: Lehman Reduces Unsecured Liabilities to $200 Billion, CEO Says
Lehman Brothers Holdings Inc., which filed for bankruptcy with $613 billion in debt, has reduced its unsecured liabilities by two-thirds to about $200 billion, said Chief Executive Officer Bryan Marsal.
Lehman’s original debt included $400 billion of short term loans offset by a similar amount of assets that “netted out,” Marsal said in an interview. The firm has $7 billion in cash so far to pay creditors.
“We have 500 people working the assets,” Marsal said. Based on Lehman’s bond prices of 15 cents on the dollar or less, investors anticipate recoveries of no more than $30 billion, or 15 percent of liabilities.
Marsal, 57, co-CEO of New York-based restructuring firm Alvarez & Marsal Inc., took over Lehman’s top job this year from Richard Fuld. Creditors may be paid partly in cash and partly in stock as illiquid real estate and private equity are expected to be sold in the next two to three years, said Marsal. The restructuring chief said he’s evaluating a plan to create separate companies for real estate and private equity, which would distribute stock.
His firm stands to reap a success fee based on the amount of assets recovered for investors, on top of hourly rates the firm is charging to liquidate the bank.
Once the fourth-largest U.S. investment firm, New York- based Lehman filed the biggest-ever U.S. bankruptcy on Sept. 15. The firm has yet to file up-to-date lists of assets and liabilities for all units, making it hard for creditors to figure out how much they might get, said bankruptcy lawyer Martin Bienenstock of Dewey & LeBoeuf, who represents Lehman creditors including Walt Disney Co.
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