Lehman Brothers — Corporate Update (January 2011)
21 slides from Lehman Brothers's corporate update, Jan 13, 2011
Slide 1: Lehman Brothers Holdings Inc. Plan Status Report
Exhibit 99.1 Lehman Brothers Holdings Inc. Plan Status Report January 13, 2011 LEADERSHIP P R O B L E M SO L V I N G VALUE CREATION © Copyright 2011. Alvarez & Marsal Holdings, LLC. All Rights Reserved.
Slide 2: Lehman Brothers Holdings Inc.
Lehman Brothers Holdings Inc. The information and data included in this report are derived from sources available to Lehman Brothers Holdings Inc. and its subsidiaries that have filed proceedings under chapter 11 of the Bankruptcy Code (collectively, the "Debtors"). The Debtors have prepared this pr
Slide 3: Key Questions Surrounding the Plan
Key Questions Surrounding the Plan I. What is the size and composition of the asset pie? II. What does the claims picture look like? III. How do you propose for the asset pie to be allocated? IV. Any key remaining challenges once the Plan gains consensus? 2
Slide 4: I. What is the Size and Composition of the Asset Pie?
I. What is the Size and Composition of the Asset Pie? ($ in billions) 6/30/10 (4) 12/31/10 Cash $ 21.1 $ 24.0 Financial Assets (1) 38.2 37.1 (2) Projected Reinvestment (1.8) (1.0) Estimated Net Recovery (3) $ 57.5 $ 60.1 Notes: (1) Estimate of gross proceeds on future asset dispositions and foreign
Slide 5: What is the Status of Further Asset Liquidations?
I. What is the Size and Composition of the Asset Pie? (cont’d) A. What is the Status of Further Asset Liquidations? Market for sale or refinancing continues to improve • Commercial / multi-family cap rates approaching mid-2008 levels • M&A activity and refinancing has picked up Opportunity cost much
Slide 6: What Resources are Employed? Asset Management
I. What is the Size and Composition of the Asset Pie? (cont’d) B. What Resources are Employed? Asset Management Resources (FTEs) Actual Actual Proj. Proj. 12/31/09 12/31/10 3/31/11 6/30/11 Lehman 215 219 207 206 A&M 39 33 24 17 Total 254 252 231 223 5
Slide 7: II. What Does the Claims Picture Look Like?
II. What Does the Claims Picture Look Like? ($ in billions) April 14, 2010 September 22, 2010 December 31, 2010 Adjusted Likely Adjusted Likely Adjusted Likely Claims Outstanding Allowed Outstanding Allowed Outstanding Allowed LBHI: As Filed Claims Claims Claims Claims Claims Claims Direct Claims $2
Slide 8: Claims and General Administrative Resources
II. What Does the Claims Picture Look Like? (cont’d) A. What Resources are Employed? Claims and General Administrative Resources (FTEs) Actual Actual Proj. Proj. 12/31/09 12/31/10 3/31/11 6/30/11 A&M Lehman A&M Lehman A&M Lehman A&M Lehman Claims Management 23 158 27 146 22 126 19 120 Finance, Tax a
Slide 9: Recap of the 9/22/10 State of the Estate
III. How do You Propose for the Asset Pie to be Allocated? A. Recap of the 9/22/10 State of the Estate Priorities announced at the State of the Estate: • Continued focus on claims assessment • Continued focus on foreign affiliates to obtain Plan support • Engage domestic creditor constituents 8
Slide 10: Foreign Affiliates
III. How do You Propose for the Asset Pie to be Allocated? (cont’d) B. Foreign Affiliates Substantial progress has been made: • Two additional Global Protocol meetings bringing total to seven group meetings dedicated to the LBHI Plan • Exchange of proposals for terms of settlement agreements to be e
Slide 11: Domestic Affiliates
III. How do You Propose for the Asset Pie to be Allocated? (cont’d) C. Domestic Affiliates Primary focus since 9/22/10 has been to work with the Unsecured Creditors Committee to develop a common approach to a compromise plan that is thoughtful and fair to all stakeholders Additionally, as a result o
Slide 12: Overview of Proposed First Amended Plan
III. How do You Propose for the Asset Pie to be Allocated? (cont’d) D. Overview of Proposed First Amended Plan The Plan will encompass an economic compromise of creditor claims and provides for a two step framework: • Settlement compromise between the Senior and General Unsecured Creditors of LBHI a
Slide 13: Overview of Proposed First Amended Plan (cont'd)
III. How do You Propose for the Asset Pie to be Allocated? (cont’d) D. Overview of Proposed First Amended Plan (cont’d) • Settlement compromise between the Debtors and the Foreign Affiliates – Creditors of foreign affiliates with a guarantee claim against LBHI will have a percentage of their recover
Slide 14: Conclusion
III. How do You Propose for the Asset Pie to be Allocated? (cont’d) E. Conclusion Since March 2010 the Debtors have refined: • the fact base and legal analysis as to the enforceability of various guarantee claims • their understanding of the positions taken by the numerous Lehman constituents • thei
Slide 15: Timetable - Next Steps
III. How do You Propose for the Asset Pie to be Allocated? (cont’d) F. Timetable - Next Steps Amended Plan and Amended Disclosure Statement should be filed within days Debtors will review and discuss the Amended Plan with the key constituents in the days and weeks following the filing Prosecution of
Slide 16: IV. Any Key Remaining Challenges, Once the Plan Gains Consensus?
IV. Any Key Remaining Challenges, Once the Plan Gains Consensus? A significant amount of filed claims remains unresolved LBSF and the other estates with derivative assets have made significant progress on the asset (or receivable) collection process The key challenge is to find a fair and cost effec
Slide 17: Derivatives Claims Update
IV. Key Remaining Challenge (cont’d) Derivatives Claims Update ($ in millions) Claims Contracts Trades Derivative Claims (1) $45,311 2,961 961,436 Settled $5,040 1,561 69,684 Remaining $40,271 1,400 891,752 Big Banks (share % of claims) 48% 5% 85% Note: (1) Derivative claims are claims prior to adju
Slide 18: Derivatives Claims Settlement Rules
IV. Key Remaining Challenge (cont’d) The Derivatives Claims Settlement Framework concept was developed in collaboration with certain of the Big Banks and the UCC The Derivative Claims Settlement Framework provides for: • Derivative claims settlement rules • A commitment to creditors to a process and
Slide 19: Exceptions to the Rules
IV. Key Remaining Challenge (cont’d) Exceptions to the Rules • Commercially reasonable replacement of trade at Termination Date • Commercially reasonable Market Quotation Process (1992 ISDA) at Termination Date 18
Slide 20: Process and Timeline
IV. Key Remaining Challenge (cont’d) Process and Timeline • Claims valuation rules to be developed in collaboration with the UCC with feedback from key market participants (certain Big Banks) • Framework to be applied to all unsettled derivative claims through the Plan with the creation of separate
Slide 21: Key Benefits of Settlement Framework
IV. Key Remaining Challenge (cont’d) Key Benefits of Settlement Framework • Uniformity – Consistent rules to apply to valuation of all derivative claims • Transparency – Rules will be published and claims valuations can be reviewed • Expediency – Avoid years of litigation • Consensual Approach – Rul
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