Investment Management Alert
August 2009
Authors:
Gordon F. Peery
gordon.peery@klgates.com
+1.617.261.3269
Charles A. Dale III
chad.dale@klgates.com
+1.617.261.3112
Mackenzie L. Shea
mackenzie.shea@klgates.com
+1.617.261.3250
Matthew P. O'Connor
matthew.oconnor@klgates.com
+1.617.261.3228
K&L Gates is a global law firm with
lawyers in 33 offices located in North
America, Europe, Asia and the Middle
East, and represents numerous GLOBAL
500, FORTUNE 100, and FTSE 100
corporations, in addition to growth and
middle market companies,
entrepreneurs, capital market
participants and public sector entities.
For more information, visit
www.klgates.com.
September 22, 2009 Deadline Set for
Asserting Lehman Claims, Including
Derivative and Guaranty Claims
In the next step taken in the largest bankruptcy filing in the history of corporate
finance, the United States Bankruptcy Court for the Southern District of New York
(the “Bankruptcy Court”) ordered that September 22, 2009 (the “Bar Date”) is the
deadline by which all proofs of claim must be filed against Lehman Brothers
Holdings, Inc. (“LBHI”) and certain affiliated debtors 1 (collectively with LBHI,
“Lehman”). A common misconception is that the Bar Date in September only
concerns claims arising under guaranties and derivative contracts (although that is
the focus of this Alert). That is not the case. Rather, all claims against Lehman must
be filed by September 22, 2009. The consequence for failing to properly and timely
file a claim is losing the right to assert the claim and recover amounts that may be
owed by Lehman.
The Bankruptcy Court also established October 22, 2009 as the deadline for filing a
completed questionnaire relating to claims based on derivative contracts and
guaranties (the “Questionnaire Deadline”) and for uploading and electronically filing
supporting documentation. Because the process for meeting these deadlines in
September and October will be time consuming, this Alert aims to assist claimants in
understanding what the recent order from the Bankruptcy Court covers, what is
required and when.
Action Items for Derivatives and Guaranty Claims
The first step is determining whether you have a claim against Lehman based on a
derivative contract or guaranty. If you have a claim against certain Lehman entities
you must file a proof of claim by the Bar Date, using the claim form approved by the
Bankruptcy Court. The following steps should be taken to ensure that your rights are
protected:
•
Inventory all past and existing transactions with Lehman to identify which are
“Derivative Contracts,” which include swap agreements and forward contracts as
those terms are defined in the U.S. Bankruptcy Code. Due to the expansive
scope of the term “Derivative Contracts,” an early lead item is to conduct
internal inventories (and request that advisers conduct inventories, if applicable)
to identify arrangements that constitute “Derivative Contracts”;
•
Identify collateral supporting the transactions that fit the broad description of
Derivative Contracts;
•
Confer with qualified legal counsel to determine how to appropriately address
collateral disposition issues and prepare for necessary filings by the Bar Date
and Questionnaire Deadline; and
Investment Management Alert
•
Take the same steps with respect to claims
arising under guarantees (“Guarantees”),
particularly Guarantees by one Lehman entity
(e.g., LBHI) of the obligations of any other
Lehman entity.
•
Securities listed on the Master List of Securities
(http://www.lehman-docket.com) and the sale,
issuance or distribution of those securities
(however, no questionnaire needs to be
completed prior to the Questionnaire Deadline
with respect to these claims), or guarantee of
such securities; and
•
Rejection of an executory contract or unexpired
lease (these claims are to be filed by the later of
the Bar Date or forty-five days after the
effective date of such rejection).
Claims Relevant to the Bar Date
While claims arising out of Derivative Contracts and
Guarantees are to be filed by the Bar Date, the order
of the Bankruptcy Court also requires that all other
claims against any Lehman entity must also be filed
by September 22, 2009, including, but not limited to,
claims arising out of:
•
Disputes over ownership interests of the
Lehman debtors;
•
Derivative Contracts that were the subject of
claims filed previously but not on the forms now
prescribed by the Bankruptcy Court;
Conclusion
In the event that you need assistance evaluating or
asserting claims against Lehman, including claims
arising out of Derivative Contracts and Guarantees,
please let us know.
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K&L Gates is a global law firm with lawyers in 33 offices located in North America, Europe, Asia and the Middle East, and represents numerous
GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market
participants and public sector entities. For more information, visit www.klgates.com.
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This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon
in regard to any particular facts or circumstances without first consulting a lawyer.
©2009 K&L Gates LLP. All Rights Reserved.
1
Lehman affiliates that are “Debtors”
Lehman Brothers Holdings, Inc.
LB 745 LLC
PAMI Statler Arms LLC
Lehman Brothers Commodity Services Inc.
Lehman Brothers Special Financing Inc.
Lehman Brothers OTC Derivatives Inc.
Lehman Brothers Derivative Products Inc.
Lehman Commercial Paper Inc.
Lehman Brothers Commercial Corporation
Lehman Brothers Financial Products Inc.
Lehman Scottish Finance L.P.
CES Aviation LLC
CES Aviation V LLC
CES Aviation IX LLC
East Dover Limited Luxembourg Residential Properties
Loan Finance S.a.r.l.
BNC Mortgage LLC
Structured Asset Securities Corporation
LB Rose Ranch LLC
LB 2080 Kalakaua Owners LLC
The extensive list of Lehman entities in an indicator that the
Bar Date is not limited to derivative-related claims, but in fact
is a bar date for claims that pertain to other Lehman-related
disputes, in addition to derivatives.
August 2009
2