Lehman Brothers Holdings Inc. has arrived at an agreement with Klaus Tschira, the founder of SAP AG (SAP). The German software company had been the only holdout to a multibillion-dollar settlement with the firm’s former Swiss derivatives unit Lehman Brothers Finance AG. The deal should free up another $1.8 billion that can now go to the firm’s creditors.
When Lehman failed in September 2008, this became the largest bankruptcy in our nation’s history. Markets became troubled and the global financial crisis was started. Barclays PLC (BCS) bought Lehman’s main business.
Tschira had been in a dispute with the subsidiary for years over derivatives contracts that were canceled after Lehman collapsed in 2008. The disagreement was over the way the unit calculated dames related to the termination of certain forward contracts. While two entities, a nonprofit that Tschira controls and an investment vehicle that manages his money, accused the derivatives unit of owing them $798.7 million, the unit said that the entities were the ones that owed it money.
Now that Tschira is dropping his appeal in the matter, another $1.8 billion can go to Lehman’s creditors. Per the deal, Lehman Brothers Finance will transfer over $1 billion to the holding company in New York. $1.8 billion will be distributed to creditors.
This latest securities settlement comes following other settlements reached between Lehman and Freddie Mac (FMCC0, Fannie Mae (FNMA), and its own foreign subsidiaries. This should hopefully speed up the timing of when creditors can get paid.
Already, Lehman has issued over $60 billion of the more than $70 billion that creditors are expecting. The next distribution is scheduled for April and more are likely to happen over the next several years.
SAP Founder Drops Lehman Appeal, The Wall Street Journal, February 27, 2014
Lehman Settles Court Fight With SAP Founder, Frees Up Cash, Bloomberg, February 27, 2014
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