In an announcement guaranteed to please those hedge funds who bought out their debt following their collapse six years ago, liquidators for Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) have announced a further increase in estimated recoveries of over 10%.
The main sectors contributing to the gains were private equity, derivatives and real estate investments.
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Lehman Brothers’ ongoing payouts
Since its collapse in 2008, Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) has already paid $57.1 billion to creditors, the majority of which has gone to hedge funds such as Paulson & Co. Creditors can expect further long term profits following a Lehman Brothers announcement that the liquidation process “may extend beyond 2018.”
Of the $8.3 billion added to the revised estimate, $3.7 billion is expected to come from the unwinding of its commercial real estate holdings, derivatives positions and loan portfolio in the near future.
Another $2.7 billion is slated to be received from private equity holdings, such as energy company Antero Resources Corp (NYSE:AR), manufacturer Firth Rixson Ltd. and payment processor First Data Holdings, Inc.
One greatly profitable Lehman’s holding is a 12.3% stake in Formula One racing. A recent announcement from Formula One stated that Lehman and its other owners would be sharing a $1 billion dividend.
Estimates revised due to ongoing settlements
The largest sum of the revised estimate comes thanks to settlements with “non-controlled” affiliates. Estimates of these settlements have been increased by $6.1 billion.
Lehman Brothers has announced that the updated figures are due to ongoing legal settlements and inter-company claims.
Once the U.S’s fourth largest investment bank, Lehman Brothers’s bankruptcy led to foreign-bankruptcy proceedings for more than 80 affiliates. Settlements have been reached with almost all foreign affiliates, which include those in U.K., Japan and Switzerland.
Although Lehman Brothers’ main business was sold to Barclays PLC (NYSE:BCS) (LON:BARC), the settlements for the company’s brokerage are being managed separately.
Following the largest bankruptcy in history, Alvarez & Marsal managed the company’s assets until an official exit from bankruptcy in 2012. A reorganized company emerged at this point, with a new board of directors.