Three years after the two largest Chapter 11 bankruptcy filings in U.S. history, one case appears close to the finish line, while another could very well be stalled for some time.
U.S. Bankruptcy Court for the Southern District of New York Judge James M. Peck approved the Lehman Brothers' payment plan to creditors Tuesday. Specifics of the plan will be available to the nearly 50 creditors who combined for claims exceeding $130 within weeks, with a Nov. 4 voting deadline.
A confirmation hearing is tentatively scheduled for Dec. 6. Bryan Marsal, LBHI's Chief Executive Officer called the judge’s approval of the plan a “major milestone” in the complicated bankruptcy case. Coincidentally, there was also significant news in the last week coming out of the second largest bankruptcy case in U.S. history, though it may not be all that close to completion.
Also nearly at the three year point since it filed for Chapter 11 bankruptcy protection, Washington Mutuals creditors and shareholders presented final arguments in bankruptcy court asking for the judge to reject a $7 billion reorganization plan. Opponents argued a settlement deal WaMu made with a group of hedge funds undermines the fairness of the bankruptcy process and alleged incidents of insider trading.
The proposed settlement, like many proposed bankruptcy plans in recent years, would leave unsecured creditors and shareholders with little or nothing, more likely the latter. Even U.S. Bankruptcy Judge Mary Walrath intimated the case continues to be convoluted by those involved and that a decision on her part isn’t necessarily imminent.
Brian Shappell, NACM staff writer