NEW YORK (AP) - A Lehman Brothers lawyer told a judge on Thursday that the company is emerging from the "chaos'' that characterized its bankruptcy filing and the weeks immediately following it.
Lehman rushed into court protection on Sept. 15 after buyout negotiations failed with Bank of America Corp. and Barclays Capital and the government failed to offer a bailout.
Barclays ended up buying key Lehman units for about $1.5 billion after the filing.
"This is really an atypical case, a case without any preplanning, a case that had a high level of chaos in the first weeks,'' Lehman lawyer Harvey Miller of Weil, Gotshal & Manges said.
"We are moving out of a reactive mode.''
Miller said the failed investment bank hopes to be able to offer more details to creditors on the state of their cash and collateral within 45 to 60 days.
Miller said the biggest obstacle that lies ahead is the unwinding of 1.5 million derivatives contracts, a task that will take a long time to complete.
He added that Lehman would soon be asking the court for permission to hire 200 professionals to help it wind down those contracts, and that it would require Wall Street-type compensation to attract people qualified enough to do it.
Miller said Lehman was being inundated with hundreds of e-mails every hour from people who want to locate their securities.
It is also simultaneously dealing with three grand jury investigations from New York and New Jersey in which 12 people had been subpoenaed so far.
U.S. Bankruptcy Judge James Peck agreed to postpone his consideration of a request by some of those creditors for an investigation into money transfers Lehman made before its filing.
The hearing on that was rescheduled for Nov. 5 to give lawyers time to try to resolve it out of court.
Investment funds using the Harbinger name - which say they are owed more than $250 million - have asked to depose Lehman's Chief Financial Officer Ian Lowitt and examine internal documents for details about any assets transferred in the month before Lehman filed for bankruptcy.
Lehman opposed Harbinger's request and called it "inappropriate, unjustified and destructive,'' in a court filing.
Lehman's lawyers argued that Harbinger, and others who have seconded its request, are only trying to get what they're owed without regard for the fact that an investigation could be harmful because of the time it would take up.
Harbinger was joined by Well Fargo Bank NA, Federal Home Loan Bank of Pittsburgh, Fir Tree Value Master Fund LP and others.
Partly at issue in Harbinger's request is $8 billion that Lehman Brothers' European business has said was wrongly kept by Lehman's parent company, money the European arm felt should have been sent back the day of the filing.
Miller, Lehman's lawyer, said it was not true that $8 billion had been transferred and that Lehman Brothers Europe actually owed more than $8 billion to the Lehman parent company.
The Lehman parent company in turn owes the European unit a separate $2 billion to $3 billion, he said.
Miller also said there was no evidence of anything out of the ordinary in any transfer of assets between the two.
The judge also approved motions to employ Weil, Gotshal & Manges as bankruptcy attorneys for Lehman; Alvarez & Marsal North America LLC as its restructuring firm; and Curtis, Mallet-Prevost, Col & Mosle LLP as litigation lawyers.
Peck told Lehman to resolve objections over its cash-management system as well as related issues in the proposed sale of natural gas and electricity supplier Eagle Energy Partners, and to come back to the court within a week on those matters.
He rejected the appointment of an equity committee.
A hearing to decide whether a creditors committee can investigate JPMorgan Chase & Co., Lehman's biggest secured creditor, was postponed.
Lehman Brothers entered bankruptcy protection on Sept. 15 with assets of $639 billion and debt of $613 billion.
It was forced to file as pressure mounted from the shrinking credit markets and a loss of confidence among investors that it could carry on its day-to-day business.
The filing marked the end of what was once the fourth-largest U.S. investment bank.
In addition to a buyout by Barclays Capital of key U.S. banking units, Lehman has agreed to sell its money management arm, Neuberger Berman, to two private equity firms and its Asian, European and Middle Eastern businesses to Japan's largest brokerage, Nomura Holdings Inc.http://www.nyse.com
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