June 4, 2009
As you know, on Monday, September 15, 2008, Lehman Brothers Holdings Inc. ("Lehman Holdings") filed a voluntary petition under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), with the United States Bankruptcy Court for the Southern District of New York.[1] Subsequently, the following Lehman Holdings affiliates filed voluntary petitions under chapter 11 of the Bankruptcy Code: LB 745 LLC, PAMI Statler Arms LLC, Lehman Brothers Commodity Services, Lehman Brothers Special Financing Inc., Lehman Brothers OTC Derivatives Inc., Lehman Brothers Derivative Products Inc., Lehman Commercial Paper Inc., Lehman Brothers Commercial Corp., Lehman Brothers Financial Products Inc., Lehman Scottish Finance L.P., CES Aviation LLC, CES Aviation V LLC, CES Aviation IX LLC, East Dover Limited, Luxembourg Residential Properties Loan Finance S.a.r.l., BNC Mortgage LLC, Structured Asset Securities Corporation, LB Rose Ranch, and LB 2080 Lalakaua Owners LLC (each a "Lehman Debtor" and, together with Lehman Holdings, the "Lehman Debtors"). All these chapter 11 cases are being jointly administered under In re Lehman Brothers Holdings Inc., et al., Case Number 08-13555 (JMP) (each a "Chapter 11 Case" and, together, the "Chapter 11 Cases").[2]
The Proposed Bar Date
The Lehman Debtors have filed a motion to establish the deadline to file proofs of claim in the Chapter 11 Cases (the "Bar Date Motion"). The Lehman Debtors have proposed August 24, 2009 at 5:00 p.m. (Eastern) as the last date and time for all creditors, including affiliates of the Lehman Debtors, to file proofs of claim based on claims against the Lehman Debtors (the "Bar Date"). The Bar Date applies to claims arising prior to the date such Lehman Debtor filed its voluntary petition (the "Petition Date").[3] The proofs of claim with respect to such claims (the "Pre-petition Claims"), must be received by Epiq Bankruptcy Solutions, the claim agent for the Lehman Debtors, on or before the Bar Date. Any creditor whose claim is not actually received by Epiq Bankruptcy Solutions on or before the Bar Date will be forever barred from asserting such claim against the Lehman Debtors, the claim will be discharged, and the creditor will not be permitted to vote on any chapter 11 plan or participate in any distribution with respect to such claim.
The proposed Bar Date Order to be entered by the Bankruptcy Court will explicitly provide that third parties are not permitted to assert claims on behalf of another party, and that claims asserted by persons other than those legally authorized and entitled to assert such claim shall be disallowed.
The objection deadline with respect to the Bar Date Motion is June 12, 2009 at 4:00 p.m. (Eastern) (the "Objection Deadline"). Objections must be filed and properly served by the Objection Deadline. If no objections are received by the Objection Deadline, the Bankruptcy Court may enter the Bar Date Order at any time thereafter. If any objections are received by the Objection Deadline, the Bankruptcy Court will hold a hearing on such objections on June 17, 2009 at 2:00 p.m. (Eastern).
Derivative Contract Claims
As of the Petition Date, the Lehman Debtors were party to more than 906,000 derivatives contracts. The proposed order provides that any counterparties who are submitting a claim under one or more derivative contracts against a Lehman Debtor will be required to (i) submit a proof of claim form, which will have a box to check if the claim is based on a derivative contract, and (ii) fill out an electronic Derivative Questionnaire and electronically upload all supporting documentation rather than attaching it to the proof of claim form.
Guarantee Claims
The proposed order provides that any creditors holding claims against the Lehman Debtors that are based on a guarantee will also have to (i) file the proof of claim, which will have a box to check if the claim is based on a guarantee, and (ii) fill out an electronic Guarantee Questionnaire and electronically upload all supporting documentation rather than attaching it to the proof of claim. Where the claim is based on a guarantee of a derivative contract, creditors will have to file a proof of claim and complete both the Derivative and Guarantee Questionnaires.
Any creditor who files a proof of claim but fails to complete the applicable questionnaire(s) will be enjoined from asserting such claim and such claim will be discharged. In addition, such creditor will not be permitted to vote on any chapter 11 plan or participate in any distribution with respect to such claim.
Executory Contract and Unexpired Lease Claims
Where the creditor holds a claim arising from the rejection of an executory contract or unexpired lease, the proof of claim must be filed by the later of (i) the Bar Date and (ii) the date which is 45 days following the effective date of such rejection.
Bar Date Procedures
Creditors will be mailed proof of claim forms with a unique identification number on the form and instructions for filing such proof of claim. In addition, notice of the Bar Date will be published in The New York Times (International Edition), The Wall Street Journal (International Edition) and The Financial Times 45 days prior to the Bar Date. If a creditor does not receive a claim form with the unique identification number, it will still be able to file a claim on or before the Bar Date, but will have to state in its proof of claim that it is filing a proof of claim without the unique identification number. All proofs of claim must be in English, set forth with specificity the legal and factual basis of the claim, include supporting documentation or an explanation of why such documentation is not available, and denominate the claims in US Dollars.
Claim forms sent by first class mail should be addressed to: Lehman Brothers Holdings Claim Processing, c/o Epiq Bankruptcy Solutions, LLC, FDR Station, P.O. Box 5076, New York, NY 10150-5076. Claim forms sent by overnight mail or hand delivery should be addressed to: Epiq Bankruptcy Solutions, LLC, Attn: Lehman Brothers Holdings Claims Processing, 757 Third Avenue, 3rd Floor, New York, NY 10017. Claims will not be accepted by email, facsimile or telecopy. Proofs of claim must be actually received by Epiq Bankruptcy Solutions on or before the Bar Date. Deposit in the mail or transmission by overnight mail on the Bar Date will not constitute a timely filed claim.
We will monitor the status of this Motion and will provide another alert when the Bar Date is set. Please note that any objections to the Bar Date Motion, and the proposed Bar Date, must be filed and properly served by the Objection Deadline.
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[1] Other Lehman entities have subsequently filed for bankruptcy protection in other jurisdictions. For example, Lehman Brothers International (Europe), Lehman Brothers Ltd., Lehman Brothers Holdings PLC and LB UK RE Holdings Ltd. filed for administration in the United Kingdom, Lehman Brothers Finance S.A. is in a bankruptcy liquidation proceeding in Switzerland and Lehman Brothers Holdings Japan Inc. and Lehman Brothers Japan Inc. filed for civil rehabilitation in Japan. Claims against Lehman affiliates that are subject to a foreign bankruptcy proceeding will be administered in those foreign proceedings, and are not subject to the Bar Date and procedures set in the Chapter 11 Cases.
[2] On September 19 2008, a proceeding was commenced under the Securities Investor Protection Act of 1970 ("SIPA") with respect to Lehman Brothers Inc. ("LBI") and a trustee appointed under SIPA is administering the LBI estate. The bar date for claims against LBI was January 30, 2009 for all customer claims and June 1, 2009 for all general creditor claims. Claims against LBI will be administered in the SIPA proceeding, currently pending under Case Number 08-01420 (JMP) before the United States Bankruptcy Court for the Southern District of New York, and are not subject to the Bar Date set in the Chapter 11 Cases.
[3] The Petition Dates will be different for each Lehman Debtor. The Petition Date for Lehman Holdings is September 15, 2008. The Petition Date for Lehman Brothers Commodity Services, Lehman Brothers Special Financing Inc., and Lehman Brothers OTC Derivatives Inc. is October 3, 2008. The Petition Date for Lehman Brothers Derivative Products Inc., Lehman Commercial Paper Inc., Lehman Brothers Commercial Corp., Lehman Brothers Financial Products Inc., Lehman Scottish Finance, L.P., CES Aviation LLC, CES Aviation V LLC, CES Aviation IX LLC, and East Dover Limited is October 5, 2008. The other Petition Dates are as follows: LB 745 LLC (September 16, 2008), PAMI Statler Arms LLC (September 23, 2008), Luxembourg Residential Properties Loan Finance S.a.r.l. (January 7, 2009), BNC Mortgage LLC (January 9, 2009), Structured Asset Securities Corporation (February 9, 2009), LB Rose Ranch LLC (February 9, 2009), and LB 2080 Kalakaua Owners LLC (April 23, 2009).
Gibson, Dunn & Crutcher’s Business Restructuring and Reorganization Practice Group is available to assist in addressing any questions you may have regarding these issues. Please contact the Gibson Dunn attorney with whom you work, or any of the following practice group members:
Michael A. Rosenthal, Co-Chair – New York (212-351-3969, [email protected])
Craig H. Millet, Co-Chair – Orange County (949-451-3986, [email protected])
David M. Feldman, Co-Chair – New York (212-351-2366, [email protected])
Janet M. Weiss – New York (212-351-3988, [email protected])
Matthew J. Williams – New York (212-351-2322, [email protected])
J. Eric Wise – New York (212-351-2620, [email protected])
Oscar Garza – Orange County (949-451-3849, [email protected])
Dennis B. Arnold – Los Angeles (213-229-7864, [email protected])
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