Bloomberg News

Lehman Brokerage Has Spent $642 Million to Liquidate

October 24, 2011

(Updates with Deloitte fees in second paragraph.)

Oct. 24 (Bloomberg) -- Lehman Brothers Holdings Inc.’s brokerage has spent $642 million on its liquidation, with most of the money going for professional and consulting fees.

Trustee James Giddens and his law firm, Hughes Hubbard & Reed LLP, have earned about $169 million since the brokerage’s parent company filed the biggest bankruptcy in U.S. history in 2008, according to a filing in U.S. Bankruptcy Court in Manhattan. Deloitte LLP collected almost twice as much, or $328 million. Total fees of $544 million are in addition to the $1.4 billion spent by the Lehman parent on its own liquidation.

Lehman Brothers Inc., or what was left of the brokerage after Barclays Plc bought its best assets, has gathered $20 billion to pay claims from settlements, litigation and negotiations, Giddens said in the Oct. 21 filing. He will report later this year on how he plans to allocate the money, which won’t be distributed until the court rules on the plan and some big claims are sorted out, the trustee said.

“The timing and extent of an interim distribution will be impacted by resolution of pending contingencies,” he said in the filing.

Jake Sargent, a Giddens spokesman, didn’t immediately respond to an e-mail seeking comment on the fees.

Affiliate’s Claim

Giddens’s biggest challenge is dealing with an $8.9 billion claim by an affiliate, Lehman Brothers International (Europe), he said. The brokerage received more than $50 billion in customer claims from about 14,000 customers and has so far allowed $12.2 billion, Giddens said.

Earlier, the trustee transferred $92.3 billion in assets belonging to 110,000 Lehman customers to Barclays and Neuberger Berman Group LLC.

Lehman Brothers Holdings filed for bankruptcy on Sept. 15, 2008. The brokerage went into liquidation four days later.

The brokerage bankruptcy case is Securities Investor Protection Corp. v. Lehman Brothers Inc., 08-01420, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

--Editors: Stephen Farr, Mary Romano

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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