================================================================= LEHMAN BROTHERS BANKRUPTCY NEWS Issue Number 2 ----------------------------------------------------------------- Copyright 2008 (ISSN XXXX-XXXX) September 16, 2008 ----------------------------------------------------------------- Bankruptcy Creditors' Service, Inc. 215-945-7000 FAX 215-945-7001 ----------------------------------------------------------------- LEHMAN BROTHERS BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 572 Fernwood Lane, Fairless Hills, Pennsylvania 19030, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtor's cases. New issues are prepared by Randy T. Antoni, Psyche S. Castillon, Carlo B. Fernandez, Frauline S. Abangan and Peter A. Chapman, Editors. Subscription rate is US$45 per issue. Any re-mailing of LEHMAN BROTHERS BANKRUPTCY NEWS is prohibited. ================================================================= IN THIS ISSUE ------------- [00010] U.S. TRUSTEE SETS SEPT. 16 MEETING TO FORM COMMITTEES [00011] DEBTOR'S MOTION TO EXTEND DEADLINE TO FILE SCHEDULES [00012] DEBTOR'S MOTION TO WAIVE ASSETS & DEBTS INFO. IN PETITION [00013] DEBTOR'S MOTION TO WAIVE LIST OF CREDITORS IN PETITION [00014] NEUBERGER BERMAN, ET AL., CONTINUE OPERATIONS [00015] BARCLAYS IN TALKS TO ACQUIRE LEHMAN'S ASSETS [00016] LEHMAN'S BANKRUPTCY AFFECTS WORLD STOCK MARKETS [00017] LEHMAN BROTHERS' JAPAN UNITS FILES FOR BANKRUPTCY [00018] JAPAN FIN'L SVCS AGENCY HALTS LEHMAN UNIT'S OPERATIONS [00019] JAPAN INFUSES US$24-BIL. IN MARKET; BANKS OWED $1-BILL. [00020] CITIGROUP HAS LITTLE EXPOSURE TO LEHMAN [00021] BNY MELLON HAS MINIMAL DIRECT EXPOSURE TO LEHMAN [00022] INDIA'S ICICI BANK HAS EUR57-MIL. EXPOSURE TO LEHMAN [00023] SWEDEN'S NORDEA HAS "INSIGNIFICANT" EXPOSURE TO LEHMAN [00024] AUSTRALIA'S ANZ HAS US$120-MIL. EXPOSURE TO LEHMAN [00025] HANDELSBANKEN HAS US$91-MIL.+ EXPOSURE TO LEHMAN [00026] ISDA OUTLINES PROTOCOL FOR DERIVATIVE TRADES KEY DATE CALENDAR ----------------- 09/15/08 Voluntary Petition Date 09/16/08 Organizational Meeting to Form Creditors' Committees 09/30/08 Deadline to File Schedules of Assets and Liabilities 09/30/08 Deadline to File Statement of Financial Affairs 09/30/08 Deadline to File Lists of Contracts and Leases 10/15/08 Deadline to Provide Utilities with Adequate Assurance 12/14/08 Deadline to Remove Actions Pursuant to F.R.B.P. 9027 01/13/09 Expiration of Debtor's Exclusive Plan Proposal Period 01/13/09 Deadline to Make Decisions About Lease Dispositions 03/14/09 Expiration of Debtor's Exclusive Solicitation Period 09/15/10 Deadline for Debtor's Commencement of Avoidance Actions First Meeting of Creditors under 11 USC Sec. 341 Bar Date for filing Proofs of Claim ----------------------------------------------------------------- [00010] U.S. TRUSTEE SETS SEPT. 16 MEETING TO FORM COMMITTEES ----------------------------------------------------------------- Diana Adams, United States Trustee for Region 2, is set to convene an organizational meeting in the Chapter 11 case of Lehman Brothers Holdings Inc., on September 16, 2008, at 6:00 p.m., at The Helmsley Park Lane Hotel, 36 Central Park South, in New York. The purpose of the meeting is to form an official committee or committees of unsecured creditors in Lehman Brothers' case. The organizational meeting is not the meeting of creditors held pursuant to Section 341 of the Bankruptcy Code. A representative of Lehman Brothers, however, may attend the organizational meeting to provide information about the status of the company's bankruptcy case. ----------------------------------------------------------------- [00011] DEBTOR'S MOTION TO EXTEND DEADLINE TO FILE SCHEDULES ----------------------------------------------------------------- Lehman Brothers Holdings Inc., asked the U.S. Bankruptcy Court for the Southern District of New York to give it until November 14, 2008, to file its schedules and statement of financial affairs. Section 521 of the Bankruptcy Code and Rule 1007 of the Federal Rules of Bankruptcy Procedure require a debtor to file its (i) schedules of assets and liabilities; (ii) schedules of current income and expenditures; (iii) schedules of executory contracts and unexpired leases; and (iv) statements of financial affairs within 15 days after a debtor's bankruptcy filing. Harvey Miller, Esq., at Weil, Gotshal & Manges LLP, in New York, said that the company may not be able to complete the statements and schedules within 15 days, given the complexity of its business and the diversity of its operations. "To prepare its schedules, [Lehman Brothers] must compile information from books, records, and documents relating to thousands of claims, assets and contracts," Mr. Miller said. Lehman Brothers also asked the Court not to require the company to file a list of its equity security holders and provide them with a notice of its bankruptcy filing. "Lehman is a public company and, as of August 31, 2008, has approximately 690,000,000 shares of common stock outstanding. Such common stock is actively traded on the New York Stock Exchange, and therefore, the holders of the common stock change on a daily basis," Mr. Miller said. He pointed out that preparing the list and sending notice to all equity security holders would be expensive and time consuming. ----------------------------------------------------------------- [00012] DEBTOR'S MOTION TO WAIVE ASSETS & DEBTS INFO. IN PETITION ----------------------------------------------------------------- Lehman Brothers Holdings Inc., asked the Bankruptcy Court for exemption from the requirement of Rule 1007-2(a) of Local Bankruptcy Rules for the Southern District of New York. Local Rule 1007-2(a) requires a debtor to file an affidavit containing a summary of its assets and liabilities, a list of its properties not in its possession, the number and classes of its shares of stock, debentures or other securities that are publicly held, among other things. Lehman Brother said in a court filing that it may not be able to provide the information in the affidavit given the size and complexity of its operations, and the relatively short time that it had to prepare to file its bankruptcy case. ----------------------------------------------------------------- [00013] DEBTOR'S MOTION TO WAIVE LIST OF CREDITORS IN PETITION ----------------------------------------------------------------- Lehman Brothers Holdings Inc., sought a waiver from the Bankruptcy Court of the requirement to file a list of creditors contemporaneously with its Chapter 11 petition. Rule 1007(a)(1) of the Federal Rules of Bankruptcy Procedure and Section 521(a)(1) of the Bankruptcy Code require a debtor to file a list of its creditors on the day of its bankruptcy filing. Lehman Brothers said that it does not need to file a list of creditors because it intends to employ a notice and claims processing agent, which would be provided the list and would be responsible for mailing a notice of its bankruptcy filing to those creditors. ----------------------------------------------------------------- [00014] NEUBERGER BERMAN, ET AL., CONTINUE OPERATIONS ----------------------------------------------------------------- NEW YORK, New York -- September 15, 2008 -- Lehman Brothers Holdings Inc. stated that it has filed a petition under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. None of the broker- dealer subsidiaries or other subsidiaries of LBHI was included in the Chapter 11 filing and all of the U.S. registered broker- dealers will continue to operate. The Board of Directors of LBHI authorized the filing of the Chapter 11 petition in order to protect its assets and maximize value. In conjunction with the filing, LBHI intends to file a variety of first day motions that will allow it to continue to manage operations in the ordinary course. Those motions include requests to make wage and salary payments and continue other benefits to its employees. LBHI is exploring the sale of its broker-dealer operations and, as previously announced, is in advanced discussions with a number of potential purchasers to sell its Investment Management Division. LBHI intends to pursue those discussions as well as a number of other strategic alternatives. Neuberger Berman, LLC will continue to conduct business as usual and will not be subject to the bankruptcy case of its parent, and its portfolio management, research and operating functions remain intact. In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings' creditors. The directors of certain UK companies including Lehman Brothers International (Europe), Lehman Brothers Holdings Plc, Lehman Brothers Limited and LB UK RE Holdings Limited have concluded that in the absence of ongoing financial support from the ultimate parent company, they are or are likely to become unable to pay their debts as they fall due and accordingly have taken steps to place those companies into administration. ----------------------------------------------------------------- [00015] BARCLAYS IN TALKS TO ACQUIRE LEHMAN'S ASSETS ----------------------------------------------------------------- Two days after abandoning its plan of acquiring Lehman Brothers Holdings Inc., Barclays Plc, is back on the negotiating table to buy some assets of the company according to a report by Bloomberg. Lehman Brothers filed for bankruptcy on Sept. 15, after Barclays and Bank of America Corp., pulled out from the sale negotiations. Barclays withdrew, citing the lack of guarantees from the government or other Wall Street firms to protect against potential losses on Lehman Brothers' assets. Barclays is in talks to buy Lehman Brothers' broker-dealer unit, which trades stocks and bonds, underwrites securities, and advises on mergers and acquisitions, to increase its U.S. securities business, the report said. "If Barclays can buy these assets with limited liability, that would make sense. It would also mean Barclays moves into equities, which on the plus side diversifies the revenue mix," Bloomberg quoted Mamoun Tazi, a London-based analyst at MF Global Securities Ltd., as saying. Meanwhile, www.independent.co.uk, reported that the talks are focused on the so-called "clean parts" of Lehman Brothers' U.S. operations including core investment banking infrastructure and staff, and none of its mortgage-related assets that ran the company aground. Barclays said that there is no assurance the negotiations would result in an agreement. ----------------------------------------------------------------- [00016] LEHMAN'S BANKRUPTCY AFFECTS WORLD STOCK MARKETS ----------------------------------------------------------------- Global markets have plummeted following the bankruptcy filing of top U.S. investment bank Lehman Brothers Holdings Inc. According to a report by BBC News, Japan's benchmark Nikkei-225 index dropped by 4.7% in the first half of trading while South Korean shares shed more than 5% in value in just 20 minutes. Markets in other Asian countries were also sharply down. According to AFP, Hong Kong share prices plunged 6.1 percent while Chinese share prices fell 3.36 percent. In Singapore shares traded 2.31 percent lower with the blue-chip Straits Times Index down 57.54 points at 2,429.01. In Taiwan, the market dropped 3.88 percent. The weighted index shed 235.04 points or 3.88 percent to 5,817.41 after opening 304.28 points lower on turnover of 16.34 billion Taiwan dollars (505 million US). The Philippines also saw a fall, with share prices plunging 4.3 percent. The composite index was down 108.11 points at 2,428.05. "The collapse of Lehman Brothers has sent a major jolt through global financial markets as it is by far the biggest victim of the credit crisis that started in August 2007 and had been considered too big to fail," AFP quoted Global Insight economist Howard Archer as saying. ----------------------------------------------------------------- [00017] LEHMAN BROTHERS' JAPAN UNITS FILES FOR BANKRUPTCY ----------------------------------------------------------------- Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc. filed for bankruptcy in the Tokyo District Court on September 16. The two units of Lehman Brothers Holdings, Inc., which has filed for bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, have combined liabilities of JPY4 trillion (US$38 billion), Teikoku Databank Ltd. said. Lehman Brothers Japan Inc. reported about JPY3.4 trillion ($33 billion) in liabilities in its petition. Akio Katsuragi, a former Morgan Stanley executive, runs Lehman's Japan units. ----------------------------------------------------------------- [00018] JAPAN FIN'L SVCS AGENCY HALTS LEHMAN UNIT'S OPERATIONS ----------------------------------------------------------------- The Financial Services Agency, Japan's financial watchdog, ordered Lehman Brothers Japan Inc., which has filed for bankruptcy protection, to halt operations for 12 days, following its parent's bankruptcy filing, various reports say. According to Reuters, FSA ordered Lehman Brothers Japan Inc. to halt operations, except for carrying out existing contracts or returning assets to customers, from Sept. 15 to Sept. 26. The regulator, Reuters relates, had earlier told the Japanese unit to retain assets equivalent to its liabilities in Japan, excluding those liabilities owed to parties overseas. FSA said it was taking action to make sure "not to damage the benefits of creditors and investors through the outflow of money from Lehman's assets to overseas affiliated companies" following the bankruptcy. The Finance Ministry, Japan Daily New relates, also said it has decided to delist Lehman Brothers Japan as a special market participant or primary dealer in the government bond market for 11 days, starting Tuesday, Sept. 16. The Nikkei business Daily, AFP notes, said the regulator was in contact with U.S. financial authorities and Japanese financial institutions to assess the damage. "The US authorities say they will protect customers' assets. We are analyzing a possible effect" on the Japanese financial sector," AFP cited an anonymous official at the watchdog as saying. ----------------------------------------------------------------- [00019] JAPAN INFUSES US$24-BIL. IN MARKET; BANKS OWED $1-BILL. ----------------------------------------------------------------- Reuters reports that The Bank of Japan injected US$24,000,000,000 into the Japanese market, the largest since March, and Prime Minister Yasuo Fukuda called an urgent meeting with key ministers, as stocks slid and bonds soared after Lehman Brothers Holdings, Inc.'s bankruptcy filing in the United States. "The Bank of Japan will carefully monitor the recent situation surrounding U.S. financial institutions and its impact," central bank governor Masaaki Shirakawa said in a statement. Chief Cabinet Secretary Nobutaka Machimura that Japan's government isn't considering "additional" measures to boost economic growth and stabilize markets after Lehman Brothers Holdings's bankruptcy filing. According to Japan-based The Daily, Financial Services Minister Toshimitsu Motegi sought to allay fears by saying the impact on Japanese financial institutions was limited. "So far, we haven't confirmed any signs that Japanese financial institutions are seriously affected. Officials will "raise alert levels" to closely monitor the situation, he said, the same report relates. Bloomberg News relates, Mr. Machimura said that the bankruptcy will have a "limited" effect on Japan's financial companies. "It won't affect Japanese financial institutions seriously," he said. Mr. Machimura's remark, Bloomberg News points out, follows that of ruling Liberal Democratic Party Acting Secretary-General Hiroyuki Hosoda, who said the government should take "emergency economic and fiscal measures" to restore confidence. The Daily says, Tokyo's Nikkei 225 index plunged more than 5%, falling under than 12,000-point level for the first time since mid-March. The dollar also nose-dived to 104 yen levels, the same report adds. Seven of top 30 unsecured creditors of Lehman are Japanese banks, who are owed money for bank loans: Japan Bank Scheduled Debt ---------- ------------- AOZORA Bank $463,000,000 Shinesi Bank Ltd. 231,000,000 UFJ Bank Limited 185,000,000 Mizuho Corporate Bank 93,000,000 Shinkin Central Bank 93,000,000 Chuo Mitsui Trust & Banking 93,000,000 Nippon Life Insurance Co. 46,000,000 ----------------------------------------------------------------- [00020] CITIGROUP HAS LITTLE EXPOSURE TO LEHMAN ----------------------------------------------------------------- See prior related entry at [00005] (List of 30 Largest Unsecured Creditors). Citigroup Inc., said in a statement that it has little or no exposure to Lehman Brothers Holdings Inc. In Lehman's list of 30 largest unsecured creditors, Citigroup is listed as an indenture trustee to about $138,000,000,000 in unsecured debt by Lehman Brothers. Citigroup clarified that it is not owed money by Lehman Brothers and is merely serving as an intermediate between the bank and buyers of its bonds. "Our role in this issue is administrative in nature and does not represent exposure for Citi to Lehman [Brothers]. Any assertions to the contrary are false," Citigroup said in the statement. ----------------------------------------------------------------- [00021] BNY MELLON HAS MINIMAL DIRECT EXPOSURE TO LEHMAN ----------------------------------------------------------------- See prior related entry at [00005] (List of 30 Largest Unsecured Creditors). The Bank of New York Mellon Corp., said in a statement that it has little or no exposure to Lehman Brothers Holdings Inc. Bank of New York Mellon is listed in Lehman's list of 30 largest unsecured creditors is a trustee to about $15,000,000,000 of debt. The Bank of New York Mellon also stressed that it has no outstanding loans to Lehman Brothers and has only minimal direct exposure to the company. It further said that its "indirect exposure primarily relates to [Lehman Brothers'] short-term debt" held in its client portfolios. ----------------------------------------------------------------- [00022] INDIA'S ICICI BANK HAS EUR57-MIL. EXPOSURE TO LEHMAN ----------------------------------------------------------------- ICICI Bank UK PLC said in a statement that it holds EUR57,000,000 of senior bonds of Lehman Brothers Inc. As part of its treasury operations, ICICI Bank Limited has undertaken transactions with Lehman Brothers entities as counter- parties. The exposure to Lehman Brothers entities on account of these transactions and potential loss thereon are not material, ICICI said. ----------------------------------------------------------------- [00023] SWEDEN'S NORDEA HAS "INSIGNIFICANT" EXPOSURE TO LEHMAN ----------------------------------------------------------------- Stockholm, Sweden-based Nordea said it has no credit exposure in terms of bond holdings or credit facilities to Lehman Brothers. In the capital market operations, Nordea has traded with Lehman Brothers as counterparty in derivatives transactions. "The net exposure in these transactions, net of collateral, is insignificant." Nordea is replacing most of its derivative contracts currently held with Lehman Brothers with other counterparties. These replacement costs will be limited. Nordea added that its strong funding and capital position is not affected. Nordea issued the statement following Monday's announcement from Lehman Brothers Holdings Inc. that it has filed Chapter 11 bankruptcy petition. ----------------------------------------------------------------- [00024] AUSTRALIA'S ANZ HAS US$120-MIL. EXPOSURE TO LEHMAN ----------------------------------------------------------------- Subsequent to Lehman Brothers Holdings Inc. announcing yesterday their intention to file a Chapter 11 Bankruptcy petition, ANZ provided information to clarify its counterparty exposure to Lehman. ANZ said its total exposure to the Lehman group of companies is approximately US$120,000,000 comprised of US$28,000,000 exposure to Lehman Brothers Holdings Inc and US$92,000,000 to Lehman subsidiaries. ANZ says it is not in a position at this time to provide an estimate of the likely loss, if any. In particular, it notes that Lehman subsidiaries are not part of the Chapter 11 filing. Lehman Bros. are also amongst 800 counterparties included in the underlying assets for ANZ's credit intermediation trades; their default has little impact on the level of first loss protection, ANZ said. ----------------------------------------------------------------- [00025] HANDELSBANKEN HAS US$91-MIL.+ EXPOSURE TO LEHMAN ----------------------------------------------------------------- In its list of largest unsecured creditors, Lehman Brothers Holdings, Inc., said that it owes Svenska Handelsbanken US$140,610,543 for letters of credit. Handelsbanken issued a statement today that the exposure figure which Lehman Brothers Holdings Inc. published was as of 2 July 2008. The exposure is currently US$91,000,000, Handelsbanken said. Handelsbanken's exposure comprises issued letters of credit, i.e. guarantees, in favor of a third party. At present, there are no claims against Handelsbanken under these letters of credit. In other respects, Handelsbanken has dealings with some of Lehman Brothers' subsidiaries. These transactions comprise letters of credit (US$16,000,000) as well as securities lending and long derivative transactions with collateral. For short-term derivatives without collateral, the Bank's exposure is US$19,000,000. ----------------------------------------------------------------- [00026] ISDA OUTLINES PROTOCOL FOR DERIVATIVE TRADES ----------------------------------------------------------------- NEW YORK, New York -- September 15, 2008 - The International Swaps and Derivatives Association (ISDA) issued the following statement with regards to recent industry developments, including the Chapter 11 Bankruptcy Petition filing by Lehman Brothers Holdings Inc. "The current environment is obviously a difficult period for industry participants," said Eraj Shirvani, ISDA's chairman and managing director and head of European credit, Credit Suisse. "ISDA believes, however, that the industry's progress in building a strong foundation for our business will enable it to successfully address current issues. The privately negotiated derivatives business ­ including the credit default swaps business ­ continues to function well in these times." "Over the past 25 years, ISDA and the privately negotiated derivatives business have developed a robust, resilient industry framework and infrastructure," said Robert Pickel, the Association's chief executive officer. "Our collective efforts to identify and reduce the sources of risk in our business during this period drove the creation of the ISDA Master Agreement, supporting documentation architecture, netting agreements, collateral agreements and other risk-reduction and risk- mitigation tools. These tools enable and provide the legal certainty for counterparties to net down their exposures to a single economic position and to further manage that position through the use of collateral." Mr. Pickel added: "ISDA is working with all constituents across the industry to realize swift and smooth resolution in closing out bilateral derivatives positions in which Lehman Brothers Holdings Inc. is either a counterparty or reference entity. The Association expects the following procedures to apply in relation to such transactions: Where a market participant is facing a Lehman group entity as counterparty on an OTC derivative trade, whatever the underlying asset class (eg, interest rate swap and including credit derivatives): Participants are expected to refer to the Master Agreements and Credit Support (collateral) documentation that they have in place covering OTC derivative transactions with one or more Lehman group entities and take advice from legal counsel as appropriate. Where participants determine that an event of default has occurred with respect to their counterparty (and, depending on the terms of their agreements, other group entities), the terms of this documentation will allow participants to take bilateral action to: i) close out contracts; ii) determine the net amount owing between them (by reference to the method applicable in their documentation, whether Close-out Amount, Market Quotation, or Loss); and iii) take into account any collateral that may have been posted. Parties are expected to determine when and how to put these provisions into practice, working with their legal counsel as appropriate. Where a Lehman group entity is the subject of a credit derivative trade, i.e., it is the Reference Entity: A decision has been made to hold an auction with respect to covered credit derivatives transactions that reference LBHI. ISDA will perform its usual role in relation to such auction. This process will follow the usual timeline, involving market participants in all the stages that normally apply in effecting a protocol. Interested parties should continue to monitor the ISDA Web site at http://www.isda.org/ for ongoing announcements in relation to market developments. About ISDA ISDA, which represents participants in the privately negotiated derivatives industry, is among the world's largest global financial trade associations as measured by number of member firms. ISDA was chartered in 1985, and today has approximately 850 member institutions from 56 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities. Information about ISDA and its activities is available on the Association's web site: http://www.isda.org/ *** End of Issue No. 2 ***