Friday, December 17, 2010

San Mateo County Lehman recovery update


The Daily Journal 12/16/10.  San Mateo County is joining 10 other Lehman Brothers creditors like hedge fund Paulson & Co. and the California Public Employees’ Retirement System in proposing an alternative way of distributing the $57.5 billion in assets. Rather than accept Lehman’s plan to the bankruptcy court which apportions creditors varying amounts of pennies on the dollar, an ad hoc group whose members have similar investments filed a rival reorganization plan with the U.S. Bankruptcy Court in New York.

The group is collectively owed nearly $12.5 billion from Lehman’s holding company and entities but would recover much less under Lehman’s plan than its own. “Their plan makes no sense at all,” said Chief Deputy County Counsel John Beiers. “When you look at it, it’s kind of shocking that they’re treating all these creditors differently.” Lehman has several entities under its umbrella and the plan aims to pay investors based on which section it was involved. Opponents say the structure would give larger investors like banks more while leaving others, like San Mateo County, getting less. Lehman’s plan offers unsecured creditors 10.4 cents to 44.2 cents on the dollar. General unsecured creditors would recover 14.7 cents on the dollar while creditors of the derivatives and commercial paper units would recover 21.9 percent to 44.2 cents on the dollar.


San Mateo County’s expected payout would be 17.4 cents on the dollar, Beiers said. According to Beiers, the issue is definitely financial but also one of principal. “The county considered Lehman to be one business entity when the treasurer invested in it, not a specific subset. We feel we have a compelling argument to the court,” Beiers said.  In comparison to that plan, yesterday’s filing would give all Lehman creditors 24.5 cents on the dollar. Lehman’s right to an exclusive plan expired after 18 months, opening the way for alternatives. Lehman may also file a modified plan in the future with tweaked figures.


San Mateo County lost $155 million from its investment pool when the Wall Street titan failed more than two years ago, sparking the largest bankruptcy in U.S. history and numerous failed attempts to make financially wounded jurisdictions whole. The county investment pool includes 1,050 different accounts from cities, school districts and special agencies. Of that, $20 million came from school districts who have since sued San Mateo County, more than $1 million from Peninsula cities and $25 million from the San Mateo County Transportation Authority.  San Mateo County went one step beyond bankruptcy court to recoup its losses, suing the company’s individual executives and accountants, too. While those effort are ongoing, according to county spokesman Marshall Wilson, they have yet to come to fruition. Also stalled are pushes by congressional leaders like U.S. Reps. Jackie Speier, D-San Mateo, and Anna Eshoo, D-Palo Alto, to treat the affected counties, cities and agencies like banking creditors who’ve since been helped by the federal government. Likewise, the rival distribution plan’s proponents say Lehman’s own plan treats the large banks better than the smaller victims and could cause more litigation as the different entities fight over the assets. “It’s a double insult that the large banks who definitely stand to benefit from the plan have already benefited from taxpayers,” Beiers said, referring to past bailouts. There is no guarantee the bankruptcy court will accept either plan and Beiers said there is hope that the recovery could be even higher than the suggested 24.5 cents per dollar.Lehman has told the court it hopes for the bankruptcy to be completed sometime in 2011 but now everyone involved must just wait, Beiers said.


Posted by Kathy Meeh

12 comments:

Anonymous said...

Overheard someone say, 'all cities run by democrats, I will not buy their city bonds, their public pension plans are nothing but ponzi schemes'.

Anonymoose said...

Overhead someone say, "Fox News viewers are the most misinformed US citizens."

Kathy Meeh said...

Overheard someone say, "for bonds try China".

China will fund 38% of the total extended tax cuts to the wealthy 1+%. Over 12 years, that is clearly "trickle down" to the rest of us (as defined by Judge Judy).

As "Moose", 5:25pm suggests, consider changing the television channel away from Fox. Your statement about "all cities.." is "dumb as dirt".

Anonymous said...

Who is to blame? the Legislature. Read here about the raping of the State of California by the Legislatures who take cash from; Lawyers/Unions/Lobbyists , which ever writes a law they like. Aren't they supposed to write the laws themselves? Ghost writing laws for cash,is what it amounts to.If this state fails, and it will, you have only yourself to blame for electing these people in.

http://blogs.laweekly.com/informer/2010/12/25k_buys_california_laws.php

Anonymous said...

Gross mis-use of tax payers funds. High Speed Rail is the biggest scam in California.

http://www.youtube.com/watch?v=RlJvP_1VP7o

Anonymous said...

Lifestyles of the Rich and Government Pensions.

http://www.youtube.com/watch?v=JsVGpJTup9U&feature=related

Anonymous said...

$530 Million Federal Loan Solyndra received. Solyndra just announced it will not meet its construction 3000 jobs they promised to create. Who paid for this? You did. Watch this.


http://www.youtube.com/watch?v=kddeyXp2me8&feature=related

Anonymous said...

Preparing Americans for HyperInflation.

http://inflation.us/videos.html

Anonymous said...

Jerry Brown eliminates office that will hold him accountable.

http://www.latimes.com/news/local/la-me-laura-chick-20101221,0,2371842.story

Anonymous said...

Too much CARB can make you thinner.

http://www.ocregister.com/opinion/california-281056-emissions-new.html

Steve Sinai said...

Anon, as I've written before, I won't let anyone subject the rest of us to their own personal obsessions. From this point on, your comments will be marked as spam and deleted.

Go out and get a life.

Jim Wagner said...

It would be nice to see these discussions come back to something that is relevent to the people here in Pacifica. We can rant and rave all we want about the injustices done to (fill in the blanks) however, the vast majority of Pacificans will tune out. Pacifica has enough challenges to overcome that it would be nice to develop some rational discussions about solutions rather than snipe at one another. Don't drive people from this site, there really isn't a lot of choice out there to have an open discussion about issues facing Pacifica. Steve does a nice job providing this forum for us, how about using it productively.

And Merry Christmas.