Lehman Brothers Holdings asked a judge to delay a court hearing for a rival liquidation plan drawn up by bondholders including CalPERS and hedge fund Paulson & Co., saying time and money would be saved if creditors approve the defunct firm’s $61 billion plan.
“If the debtors’ plan is confirmed, it will relieve the need for further proceedings and save considerable time and expense,” it said in a filing Friday in U.S. Bankruptcy Court in Manhattan. The judge has “discretion” to give Lehman, which has been “laboring” to gain creditor consensus, first chance at getting a plan confirmed, it said.
Lehman, which collapsed in 2008, is set to ask U.S. Bankruptcy Court Judge James Peck on June 28 to allow creditors to vote on its proposal. The Paulson group, including the $234.7 billion California Public Employees’ Retirement System, Sacramento, wants its plan to be heard on the same schedule as Lehman’s. Opponents of both plans, including derivatives creditors such as Goldman Sachs Group and Silver Point Capital, want all alternative proposals to be assessed at the same time.
Lehman, which filed for Chapter 11 bankruptcy protection with debt of $613 billion, is trying to deal with mounting opposition to the way it will apportion among creditors the $61 billion it aims to raise as it liquidates assets.
In the filing, Harvey Miller, Lehman’s lead bankruptcy lawyer, said the Paulson-CalPERS plan “presents the parochial interests of 13 entities that collectively purport to hold claims of about $20.2 billion.” Writing about derivatives creditors, who have said they might file a third payment proposal for Lehman, he said, “the Big Banks assert extraordinarily large unresolved claims, which are disputed by the debtors.”
Setting a timetable to assess the plans, it would be “prudent and proper” for Mr. Peck to “grant primacy to the debtors and best serve the interests of all stakeholders,” Mr. Miller said.
Separately, the Paulson-CalPERS group responded in a filing to Mr. Miller’s earlier demand that they disclose more information about the claims they hold on the defunct firm before they participate in the bankruptcy. The same rules should apply to creditors working in a group, such as Goldman Sachs and others with derivative claims, who haven’t yet filed a bankruptcy plan for Lehman, it said. The Paulson-CalPERS proposal would commit banks and hedge funds to say what they paid for claims bought after Lehman’s bankruptcy filing.