Lehman Brothers Holdings creditors, including CalPERS and hedge fund Paulson & Co., are mulling a payout plan that would share an estimated $57.5 billion more equally than the defunct firm’s proposals, according to a person familiar with the matter.
The competing plan may be filed as early as this week, said a second person familiar with the matter. Lehman shares rose as much as 4% on the news.
A group including the $215 billion California Public Employees’ Retirement System, Sacramento, and Paulson, which has about $33 billion in hedge funds, previously faulted Lehman’s proposals in filings in U.S. Bankruptcy Court in New York.
Under Lehman CEO Bryan Marsal’s original plan filed in March, payouts would range from about 15 cents on the dollar to 44 cents. Senior bondholders would get 17.4 cents, some commercial paper holders would receive 44.2 cents, and the firm’s Lehman Brothers Special Finance unit would pay 24.1 cents. Derivatives creditors of LBSF have included Goldman Sachs Group, Morgan Stanley, Credit Suisse Group, Deutsche Bank and Bank of America Corp., according to court filings.
Mr. Marsal’s plan “pits creditors of the various estates against each other,” the CalPERS-Paulson group said earlier this year in a court filing that termed the proposals unfair. The group said some Lehman creditors would get paid twice, receiving “a full double recovery” by collecting from various Lehman entities.
“A real possibility exists that parties in interest will have no choice but to litigate,” the creditors said.
The group was readying its competing plan last week, then the filing was delayed, according to one of the people familiar with the matter, who declined to be named because the discussions are private.