Lehman Brothers Holdings to sell $4.22B in claims

NEW YORK (AP) -- Lehman Brothers Holdings Inc. said Wednesday that it and some of its affiliates have agreed to sell $4.22 billion of their general unsecured claims against the company's brokerage arm.

As part of a deal that followed an auction process, the claims will be sold for 44.5 percent of their face value, which amounts to $1.88 billion, the company said.

The deal will provide cash needed to repay billions of dollars in customer claims. Last month, a bankruptcy court judge approved a set of settlements designed to clear the way for the remnants of Lehman to repay the claims in full.

Lehman's bankruptcy in September of 2008 was the largest ever in U.S. history and the company's demise marked the beginning of the global financial crisis.

Lehman's individual retail customers were repaid in the first few days of the brokerage's liquidation. But it took several years of talks before Lehman Brothers Inc., its holding company Lehman Brothers Holdings Inc., and its European arm, Lehman Brothers International, could agree on how claims for larger customers of each unit, such as hedge funds or institutional investors, would be paid.

The three parties reached a deal last year and submitted it to the court in February. It was approved in April, settling the disputes among the entities.

The deal provides Lehman Brothers Holdings with $2.3 billion for customer claims and $14 billion for general unsecured claims. The European unit will receive $9 billion for customer claims and $4 billion for unsecured claims.