The Talent

September 22, 2010 5:13 PM

The Lehman $1 Billion Watch Continues

Posted by Zach Lowe

A couple of tidbits from the Lehman Brothers bankruptcy case, starting with this mind-boggler: The Lehman estate is tantalizingly close to breaking the $1 billion mark in fees and expenses to professionals, and lawyers, of course, are leading the pack. According to a monthly operating report, the estate has paid out $961,296,000 in fees and expenses to investment, legal, and other professionals since filing for bankruptcy almost exactly two years ago. Two years, $1 billion. Wow.

Of that $961 million and change, lawyers account for about $448 million, according to court records and regulatory filings. The big biller is, of course, Lehman's lead counsel at Weil, Gotshal & Manges; the firm billed just shy of $221 million through August 31, court records show. Other top billers include lead creditors committee counsel Milbank, Tweed, Hadley & McCoy ($69.3 million); special litigation counsel Jones Day ($35.2 million); and Jenner & Block, which billed $54.7 million for its work on the examiner's report investigating Lehman's demise. 

At the current rate, Lehman will pass the $1 billion mark in fees and expenses by the end of this month. 

But the case is progressing faster than some might have imagined possible, according to Reuters and Bloomberg. At a hearing today, Lehman's team claimed they might be able to win confirmation of a plan to reorganize and emerge from bankruptcy as early as March of next year, according to Bloomberg and Reuters. The failed bank hopes to submit that plan by the end of the fourth quarter, court records show. Lehman is negotiating with creditors all over the world to settle claims, and eventually hopes to cut the amount of creditor claims--which began at around $1.2 trillion--down to somewhere between $250 billion to $350 billion, Bloomberg says. 

Lehman hopes to pay creditors the equivalent of between 15 and 44 cents on the dollar. Once Lehman wins creditor approval for its plan and unwinds piles of complex derivatives contracts, what remains of the bank will re-emerge from Chapter 11 as a new entity known as Lamco, Reuters reports.

Of course, litigation surrounding Lehman's failure will go on well into 2012, and possibly beyond. The central case is Lehman's suit against Barclays, in which Lehman accuses the U.K. bank of receiving an improper $11 billion windfall when it purchased Lehman's main North American operations in the days after Lehman's bankruptcy filing. 

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