Paulson & Co., CalPERS and other Lehman Brothers Holdings senior bondholders filed a new liquidation plan for the defunct firm that would pay 25.4 cents on the dollar to all holders of the bonds, an increase from 24.5 cents under a plan filed in December.
The group, which includes the $230.1 billion California Public Employees’ Retirement System, Sacramento, is fighting to control Lehman’s $61 billion liquidation with a payout plan that competes with Lehman’s own proposal and a third by a group including Goldman Sachs Group and Morgan Stanley.
The fight to wring profit from the biggest bankruptcy in U.S. history goes to court on June 28, when at least two of the rival plans, from Lehman and Paulson-CalPERS, are due to be presented to U.S. Bankruptcy Judge James Peck in Manhattan. Depending on the outcome, the Paulson-CalPERS group said it’s willing to launch a lawsuit to battle for its proposal.
The other two plans “are unconfirmable, provide inferior recoveries and are subject to numerous legal and equitable defects,” the group said in Wednesday’s filing. It might use “a separate contested matter or adversary proceeding” if its plan doesn’t prevail, it said.
Kimberly Macleod, a Lehman spokeswoman, said the company was reviewing the group’s plan. Lehman has said it aims to confirm a liquidation proposal by November.
Senior bondholders are being offered 21.4 cents on the dollar in Lehman’s plan, and 16 cents in the Goldman Sachs-Morgan Stanley proposal, which would pay derivatives creditors as much as 40 cents.
Hedge fund Paulson paid as little as 9 cents on the dollar for some of its bonds, while CalPERS spent more than $1 for part of its bond holdings, according to a court filing. The group holds about $16 billion in senior bonds, out of more than $80 billion outstanding, according to Lehman.
Lehman and its affiliates on Thursday reported total assets of $250.7 billion against liabilities of $310.8 billion. The figures, as of Dec. 31, come from an unaudited balance sheet in a regulatory filing. Real estate assets were valued at $5.6 billion, mostly commercial properties.
Cash held by Lehman and its affiliates was $23.2 billion on March 31. Lehman CEO Bryan Marsal has said that over time he aims to raise a total of $61 billion to pay claims of $322 billion. The Paulson-CalPERS plan was amended partly to reflect that valuation of Lehman’s assets, according to Wednesday’s court filing.