EX-99.1 2 a10-8436_1ex99d1.htm EX-99.1

Exhibit 99.1

 

UNITED STATES BANKRUPTCY COURT

 

SOUTHERN DISTRICT OF NEW YORK

 

In re:

 

Chapter 11 Case No.

 

 

 

Lehman Brothers Holdings Inc., et al.,

 

08-13555

 

 

 

Debtors.

 

 

 

MONTHLY OPERATING REPORT

 

MARCH 2010

 

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

SCHEDULE OF PROFESSIONAL FEE AND EXPENSE DISBURSEMENTS

SCHEDULE OF HEDGING TRANSACTIONS

 

DEBTORS’ ADDRESS:

 

LEHMAN BROTHERS HOLDINGS INC.

 

 

c/o WILLIAM J. FOX

 

 

1271 AVENUE OF THE AMERICAS

 

 

35th FLOOR

 

 

NEW YORK, NY 10020

 

 

 

DEBTORS’ ATTORNEYS:

 

WEIL, GOTSHAL & MANGES LLP

 

 

c/o SHAI WAISMAN

 

 

767 FIFTH AVENUE

 

 

NEW YORK, NY 10153

 

 

 

REPORT PREPARER:

 

LEHMAN BROTHERS HOLDINGS INC., A DEBTOR IN POSSESSION

 

THIS OPERATING STATEMENT MUST BE SIGNED BY A REPRESENTATIVE OF THE DEBTOR

 

The undersigned, having reviewed the attached report and being familiar with the Debtors’ financial affairs, verifies under penalty of perjury, that the information contained therein is complete, accurate and truthful to the best of my knowledge.

 

 

Lehman Brothers Holdings Inc.

 

 

Date: April 21, 2010

By:

/s/ William J. Fox

 

 

William J. Fox

 

 

Executive Vice President

 

Indicate if this is an amended statement by checking here:        AMENDED STATEMENT o

 


 

TABLE OF CONTENTS

 

Schedule of Debtors

3

 

 

Lehman Brothers Holdings Inc. (“LBHI”) and Other Debtors and Other Controlled Subsidiaries

 

Basis of Presentation — Schedule of Cash Receipts and Disbursements

4

Schedule of Cash Receipts and Disbursements — March 2010

5

Schedule of Cash Receipts and Disbursements — January 1 — March 31, 2010

7

 

 

LBHI

 

Basis of Presentation — Schedule of Professional Fee and Expense Disbursements

9

Schedule of Professional Fee and Expense Disbursements

10

 

 

LBHI

 

Quarterly Hedging Transactions Update

11

Schedule of Hedging Transactions as of March 31, 2010

12

 

2


 

SCHEDULE OF DEBTORS

 

The following entities have filed for bankruptcy in the Southern District of New York:

 

 

 

Case No.

 

Date Filed

 

Lead Debtor:

 

 

 

 

 

Lehman Brothers Holdings Inc. (“LBHI”)

 

08-13555

 

9/15/2008

 

 

 

 

 

 

 

Related Debtors:

 

 

 

 

 

LB 745 LLC

 

08-13600

 

9/16/2008

 

PAMI Statler Arms LLC(1)

 

08-13664

 

9/23/2008

 

Lehman Brothers Commodity Services Inc. (“LBCS”)

 

08-13885

 

10/3/2008

 

Lehman Brothers Special Financing Inc. (“LBSF”)

 

08-13888

 

10/3/2008

 

Lehman Brothers OTC Derivatives Inc. (“LOTC”)

 

08-13893

 

10/3/2008

 

Lehman Brothers Derivative Products Inc. (“LBDP”)

 

08-13899

 

10/5/2008

 

Lehman Commercial Paper Inc. (“LCPI”)

 

08-13900

 

10/5/2008

 

Lehman Brothers Commercial Corporation (“LBCC”)

 

08-13901

 

10/5/2008

 

Lehman Brothers Financial Products Inc.(“LBFP”)

 

08-13902

 

10/5/2008

 

Lehman Scottish Finance L.P.

 

08-13904

 

10/5/2008

 

CES Aviation LLC

 

08-13905

 

10/5/2008

 

CES Aviation V LLC

 

08-13906

 

10/5/2008

 

CES Aviation IX LLC

 

08-13907

 

10/5/2008

 

East Dover Limited

 

08-13908

 

10/5/2008

 

Luxembourg Residential Properties Loan Finance S.a.r.l.

 

09-10108

 

1/7/2009

 

BNC Mortgage LLC

 

09-10137

 

1/9/2009

 

LB Rose Ranch LLC

 

09-10560

 

2/9/2009

 

Structured Asset Securities Corporation

 

09-10558

 

2/9/2009

 

LB 2080 Kalakaua Owners LLC

 

09-12516

 

4/23/2009

 

Merit LLC

 

09-17331

 

12/14/2009

 

LB Somerset LLC

 

09-17503

 

12/22/2009

 

LB Preferred Somerset LLC

 

09-17505

 

12/22/2009

 

 

(1)          On May 26, 2009, a motion was filed on behalf of Lehman Brothers Holdings Inc. seeking entry of an order pursuant to Section 1112(b) of the Bankruptcy Code to dismiss the Chapter 11 Case of PAMI Statler Arms LLC, with a hearing to be held on June 24, 2009.  On June 19, 2009, the motion was adjourned without a date for a continuation hearing.

 

The Chapter 11 case of Fundo de Investimento Multimercado Credito Privado Navigator Investimento No Exterior (Case No: 08-13903) has been dismissed.

 

The Chapter 11 case of Lehman Brothers Finance SA (Case No: 08-13887) has been dismissed.

 

3


 

LEHMAN BROTHERS HOLDINGS INC., (“LBHI”), AND OTHER DEBTORS AND OTHER CONTROLLED ENTITIES

 

BASIS OF PRESENTATION

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

MARCH 1, 2010 TO MARCH 31, 2010

AND

JANUARY 1, 2010 TO MARCH 31, 2010

 

The information and data included in this Monthly Operating Report (“MOR”) are derived from sources available to Lehman Brothers Holdings Inc. (“LBHI”) and its Controlled Entities (collectively, the “Company”).  The term “Controlled Entities” refers to those entities that are directly or indirectly controlled by LBHI, and excludes, among other things, those entities that are under separate administrations in the United States or abroad, including Lehman Brothers Inc., which is the subject of proceedings under the Security Investor Protection Act.  LBHI and certain of its Controlled Entities have filed for protection under Chapter 11 of the Bankruptcy Code, and those entities are referred to herein as the “Debtors”.  The Debtors’ chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure.  The Debtors have prepared this MOR, as required by the Office of the United States Trustee, based on the information available to The Debtors at this time, but note that such information may be incomplete and may be materially deficient in certain respects.  This MOR is not meant to be relied upon as a complete description of the Debtors, their business, condition (financial or otherwise), results of operations, prospects, assets or liabilities. The Debtors reserve all rights to revise this report.

 

1.               This MOR is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). This MOR should be read in conjunction with the financial statements and accompanying notes in the Company’s annual and quarterly reports that were filed with the United States Securities and Exchange Commission.

 

2.               This MOR is not audited and will not be subject to audit or review by the Company’s external auditors at any time in the future.

 

3.               The beginning and ending balances include cash in demand-deposit accounts (DDA), money-market funds (MMF), treasury bills, and other investments.

 

4.               Beginning and ending cash balances are based on preliminary closing numbers and are subject to adjustment.

 

5.               Beginning and ending cash balances exclude cash that has been posted as collateral for hedging activity.

 

6.               Beginning and ending cash balances exclude cash related to LBHI’s wholly-owned indirect subsidiaries Aurora Bank FSB (formerly known as Lehman Brothers Bank FSB), Woodlands Commercial Bank (formerly known as Lehman Brothers Commercial Bank), Lehman Brothers Trust Company N.A., and Lehman Brothers Trust Company of Delaware.

 

7.               Cash pledged on, or prior to, September 15, 2008 by the Company in connection with certain documents executed by the Company and various financial institutions has been excluded from this report.

 

8.               Intercompany transfers between Lehman entities are listed as disbursements for the paying entity and receipts for the receiving entity.

 

9.             Opening cash on 1/1/10 has been restated from previously filed MORs.

 

4


 

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Cash Receipts and Disbursements (a)

March 1, 2010 - March 31, 2010

 

Unaudited ($ in millions, foreign currencies reflected in USD equivalents)

 

 

 

LBHI

 

LBSF

 

LBCS

 

LOTC

 

LCPI

 

LBCC

 

LBFP

 

LBDP

 

Other Debtors

 

Total Debtors

 

Other Controlled Entities (b)

 

Total Debtors and Other Controlled Entities

 

Beginning Cash & Investments (3/1/10)

 

$

2,709

 

$

5,952

 

$

1,221

 

$

168

 

$

2,836

 

$

490

 

$

427

 

$

386

 

$

10

 

$

14,199

 

$

2,577

 

$

16,776

 

Sources of Cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of Advances to Aurora (c)

 

74

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

74

 

—

 

74

 

Compensation and Benefits Reimbursements (d)

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Receipts

 

14

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

14

 

12

 

26

 

Derivatives (e)

 

—

 

369

 

24

 

8

 

—

 

1

 

—

 

—

 

—

 

402

 

—

 

402

 

Loans (f)

 

2

 

—

 

—

 

—

 

313

 

—

 

—

 

—

 

—

 

315

 

—

 

315

 

Principal Investing / Private Equity (g)

 

74

 

—

 

—

 

—

 

2

 

—

 

—

 

—

 

—

 

76

 

109

 

185

 

Real Estate (h)

 

35

 

—

 

—

 

—

 

67

 

—

 

—

 

—

 

—

 

101

 

87

 

188

 

Asia

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

44

 

44

 

South America

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

3

 

3

 

Inter-Company Transfers

 

57

 

2

 

—

 

—

 

66

 

—

 

1

 

—

 

—

 

125

 

10

 

135

 

Total Sources of Cash

 

258

 

371

 

24

 

8

 

447

 

1

 

1

 

—

 

—

 

1,107

 

264

 

1,371

 

Uses of Cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits (i)

 

(34

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(34

)

—

 

(34

)

Professional Fees

 

(44

)

—

 

—

 

—

 

(1

)

—

 

—

 

—

 

—

 

(45

)

—

 

(45

)

Other Operating Expenses

 

(24

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(24

)

—

 

(24

)

Other Non-Operating Expenses

 

(3

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(3

)

—

 

(3

)

JP Morgan CDA (j)

 

(524

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(524

)

—

 

(524

)

MetLife Settlement (k)

 

—

 

—

 

—

 

—

 

(355

)

—

 

—

 

—

 

—

 

(355

)

—

 

(355

)

Derivatives (l)

 

(2

)

(146

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(148

)

—

 

(148

)

Loans (m)

 

(1

)

—

 

—

 

—

 

(194

)

—

 

—

 

—

 

—

 

(194

)

—

 

(194

)

Principal Investing / Private Equity (n)

 

(1

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(1

)

(12

)

(13

)

Real Estate (o)

 

(21

)

—

 

—

 

—

 

(7

)

—

 

—

 

—

 

—

 

(28

)

(8

)

(36

)

Asia

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(13

)

(13

)

South America

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Inter-Company Transfers

 

(10

)

(3

)

—

 

—

 

(3

)

—

 

(1

)

—

 

—

 

(16

)

(119

)

(135

)

Total Uses of Cash

 

(663

)

(149

)

—

 

—

 

(559

)

—

 

(1

)

—

 

—

 

(1,373

)

(152

)

(1,524

)

Net Cash Flow

 

(405

)

222

 

24

 

8

 

(112

)

1

 

—

 

—

 

—

 

(266

)

113

 

(153

)

FX Fluctuation (p)

 

—

 

(2

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(2

)

(3

)

(5

)

Ending Cash & Investments (3/31/10) (q)

 

$

2,304

 

$

6,172

 

$

1,244

 

$

176

 

$

2,724

 

$

491

 

$

427

 

$

386

 

$

10

 

$

13,934

 

$

2,687

 

$

16,621

 

 

NOTE: Totals may not foot due to rounding.

 

5


 

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Cash Receipts and Disbursements (a)

March 1, 2010 - March 31, 2010

 

Notes:

(a)

Includes cash and investment flows for all Debtors and Other Controlled Entities globally. Corporate, Derivatives, Loans, Principal Investing/Private Equity and Real Estate activity includes bank accounts that are managed and reconciled by Lehman US and European operations. Asia and South America activity includes bank accounts that are managed and reconciled by Lehman Asian and South American operations.

(b)

Other Controlled Entities includes all Non-Debtor entities which are under the control of LBHI. Cash activity associated with Aurora Bank, Woodlands Commercial Bank, Lehman Brothers Trust Company N.A., and Lehman Brothers Trust Company of Delaware is not reflected.

(c)

Reflects repayment of advances made to Aurora Bank for court approved repo financing facility and/or master servicing agreement.

(d)

Reflects repayment of advances for payroll and benefits disbursements made on behalf of non-controlled LBHI entities (Aurora Bank, Woodlands Commercial Bank, Lehman Brothers Trust Company NA., and Lehman Brothers Trust Company of Delaware).

(e)

Primarily reflects settlements from counterparties and the return of collateral posted for hedging.

(f)

Primarily reflects principal and interest payments from borrowers.

(g)

Primarily reflects redemptions, distributions and/or proceeds from the sale of investments.

(h)

Primarily reflects principal and interest payments on real estate loans.

(i)

Compensation and Benefits includes fees paid to Alvarez & Marsal as interim management.

(j)

Reflects payment made to JP Morgan for court approved Collateral Disposition Agreement (“CDA”).

(k)

Reflects payment made to MetLife for court approved settlement to pay off secured loan obligations.

(l)

Primarily reflects collateral posted for hedging and payments on live trades.

(m)

Primarily reflects principal and interest distributed to syndicated loan participants where Lehman acts as agent.

(n)

Primarily reflects capital calls on investments.

(o)

Primarily reflects payments made for preservation of operating and development property assets.

(p)

Reflects fluctuation in value in foreign currency bank accounts.

(q)

Ending Cash and Investment balances include approximately $2.3 billion in co-mingled and segregated accounts associated with pledged assets, court ordered segregated accounts, funds administratively held by banks, and other identified funds which may not belong to the Debtors or Other Controlled Entities. These amounts are preliminary and estimated as follows: Debtors - LBHI $208 million, LBSF $328 million, LBCS $34 million, LCPI $1.7 billion, LBCC $5 million, Lehman Scottish Finance $2 million; and non-Debtors $28 million, and are subject to adjustment. Ending Cash and Investment balances exclude approximately $287 million of cash posted as collateral for derivative hedging activity; broken down as follows: LBSF $276 million and LBFP $11 million.

 

6


 

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Cash Receipts and Disbursements (a)

January 1, 2010 - March 31, 2010

 

Unaudited ($ in millions, foreign currencies reflected in USD equivalents)

 

 

 

LBHI

 

LBSF

 

LBCS

 

LOTC

 

LCPI

 

LBCC

 

LBFP

 

LBDP

 

Other Debtors

 

Total Debtors

 

Other Controlled Entities (b)

 

Total Debtors and Other Controlled Entities

 

Beginning Cash & Investments (1/1/10)

 

$

3,071

(c)

$

5,401

 

$

1,202

 

$

167

 

$

3,628

 

$

485

 

$

425

 

$

387

 

$

10

 

$

14,776

 

$

2,423

 

$

17,199

 

Sources of Cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repayment of Advances to Aurora (d)

 

212

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

212

 

—

 

212

 

Compensation and Benefits Reimbursements (e)

 

9

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

9

 

—

 

9

 

Other Receipts

 

21

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

21

 

39

 

60

 

Derivatives (f)

 

3

 

992

 

42

 

9

 

15

 

4

 

2

 

—

 

—

 

1,067

 

110

 

1,178

 

Loans (g)

 

7

 

—

 

—

 

—

 

889

 

—

 

—

 

—

 

—

 

896

 

—

 

896

 

Principal Investing / Private Equity (h)

 

187

 

—

 

—

 

—

 

15

 

—

 

—

 

—

 

—

 

202

 

184

 

386

 

Real Estate (i)

 

59

 

—

 

—

 

—

 

129

 

—

 

—

 

—

 

—

 

188

 

106

 

293

 

Asia

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

121

 

121

 

South America

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

5

 

5

 

Inter-Company Transfers

 

64

 

2

 

—

 

—

 

66

 

3

 

1

 

—

 

—

 

135

 

24

 

159

 

Total Sources of Cash

 

562

 

993

 

42

 

9

 

1,113

 

7

 

3

 

—

 

—

 

2,730

 

589

 

3,319

 

Uses of Cash:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advances to Aurora (j)

 

(177

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(177

)

—

 

(177

)

Compensation and Benefits (k)

 

(137

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(137

)

(9

)

(145

)

Professional Fees

 

(110

)

—

 

—

 

—

 

(1

)

—

 

—

 

—

 

—

 

(111

)

—

 

(111

)

Other Operating Expenses

 

(52

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(52

)

(10

)

(62

)

Other Non-Operating Expenses

 

(51

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(51

)

—

 

(51

)

Bankhaus Settlement (l)

 

(196

)

—

 

—

 

—

 

(1,073

)

—

 

—

 

—

 

—

 

(1,269

)

(10

)

(1,279

)

JP Morgan CDA (m)

 

(524

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(524

)

—

 

(524

)

MetLife Settlement (n)

 

—

 

—

 

—

 

—

 

(390

)

—

 

—

 

—

 

—

 

(390

)

—

 

(390

)

Derivatives (o)

 

(4

)

(205

)

—

 

—

 

—

 

—

 

—

 

(2

)

—

 

(210

)

—

 

(210

)

Loans (p)

 

(1

)

—

 

—

 

—

 

(517

)

—

 

—

 

—

 

—

 

(518

)

—

 

(518

)

Principal Investing / Private Equity (q)

 

(10

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(10

)

(30

)

(40

)

Real Estate (r)

 

(33

)

—

 

—

 

—

 

(27

)

—

 

—

 

—

 

—

 

(60

)

(32

)

(92

)

Asia

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(95

)

(95

)

South America

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

(10

)

(10

)

Inter-Company Transfers

 

(23

)

(6

)

—

 

—

 

(3

)

—

 

(1

)

—

 

—

 

(33

)

(127

)

(159

)

Total Uses of Cash

 

(1,318

)

(211

)

—

 

—

 

(2,010

)

—

 

(1

)

(2

)

—

 

(3,541

)

(323

)

(3,688

)

Net Cash Flow

 

(756

)

783

 

42

 

9

 

(897

)

7

 

2

 

(2

)

—

 

(811

)

266

 

(369

)

FX Fluctuation (s)

 

(11

)

(12

)

—

 

—

 

(7

)

—

 

—

 

—

 

—

 

(30

)

(2

)

(32

)

Ending Cash & Investments (3/31/10) (t)

 

$

2,304

 

$

6,172

 

$

1,244

 

$

176

 

$

2,724

 

$

491

 

$

427

 

$

386

 

$

10

 

$

13,934

 

$

2,687

 

$

16,621

 

 

NOTE: Totals may not foot due to rounding.

 

7


 

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Cash Receipts and Disbursements (a)

January 1, 2010 - March 31, 2010

 

Notes:

(a)

Includes cash and investment flows for all Debtors and Other Controlled Entities globally.  Corporate, Derivatives, Loans, Principal Investing/Private Equity and Real Estate activity includes bank accounts that are managed and reconciled by Lehman US and European operations.  Asia and South America activity includes bank accounts that are managed and reconciled by Lehman Asian and South American operations.

(b)

Other Controlled Entities includes all Non-Debtor entities which are under the control of LBHI.  Cash activity associated with Aurora Bank, Woodlands Commercial Bank, Lehman Brothers Trust Company N.A., and Lehman Brothers Trust Company of Delaware is not reflected.

(c)

The opening cash and investments balance as of 1/1/10 was restated  to include an increase of $45 million.

(d)

Reflects repayment of advances made to Aurora Bank for court approved repo financing facility and/or master servicing agreement.

(e)

Reflects repayment of advances for payroll and benefits disbursements made on behalf of non-controlled LBHI entities (Aurora Bank, Woodlands Commercial Bank, Lehman Brothers Trust Company NA., and Lehman Brothers Trust Company of Delaware).

(f)

Primarily reflects settlements from counterparties and the return of collateral posted for hedging.

(g)

Primarily reflects principal and interest payments from borrowers.

(h)

Primarily reflects redemptions, distributions and/or proceeds  from the sale of investments.

(i)

Primarily reflects principal and interest payments on real estate loans.

(j)

Reflects advances made to Aurora Bank for court approved repo financing facility or master servicing agreement.

(k)

Compensation and Benefits includes fees paid to Alvarez & Marsal as interim management.

(l)

Reflects payments made to Bankhaus for court approved settlement.

(m)

Reflects payment made to JP Morgan for court approved Collateral Disposition Agreement (“CDA”).

(n)

Reflects payment made to MetLife for court approved settlement to pay off secured loan obligations.

(o)

Primarily reflects collateral posted for hedging and payments on live trades.

(p)

Primarily reflects principal and interest distributed to syndicated loan participants where Lehman acts as agent.

(q)

Primarily reflects capital calls on investments.

(r)

Primarily reflects payments made for preservation of operating and development property assets.

(s)

Reflects fluctuation in value in foreign currency bank accounts.

(t)

Ending Cash and Investment balances include approximately $2.3 billion in co-mingled and segregated accounts associated with pledged assets, court ordered segregated accounts, funds administratively held by banks, and other identified funds which may not belong to the Debtors or Other Controlled Entities.  These amounts are preliminary and estimated as follows:  Debtors - LBHI $208 million, LBSF $328 million, LBCS $34 million, LCPI $1.7 billion, LBCC $5 million, Lehman Scottish Finance $2 million; and non-Debtors $28 million, and are subject to adjustment.  Ending Cash and Investment balances exclude approximately $287 million of cash posted as collateral for derivative hedging activity; broken down as follows: LBSF $276 million and LBFP $11 million.

 

8


 

LEHMAN BROTHERS HOLDINGS INC. (“LBHI”)

 

BASIS OF PRESENTATION

SCHEDULE OF PROFESSIONAL FEE AND EXPENSE DISBURSEMENTS

DATED FROM FILING DATE TO MARCH 31, 2010

 

The information and data included in this Monthly Operating Report (“MOR”) are derived from sources available to Lehman Brothers Holdings Inc. (“LBHI”) and its Controlled Entities (collectively, the “Company”).  The term “Controlled Entities” refers to those entities that are directly or indirectly controlled by LBHI, and excludes, among other things, those entities that are under separate administrations in the United States or abroad, including Lehman Brothers Inc., which is the subject of proceedings under the Security Investor Protection Act.  LBHI and certain of its Controlled Entities have filed for protection under Chapter 11 of the Bankruptcy Code, and those entities are referred to herein as the “Debtors”.  The Debtors’ chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure.  The Debtors have prepared this MOR, as required by the Office of the United States Trustee, based on the information available to The Debtors at this time, but note that such information may be incomplete and may be materially deficient in certain respects.  This MOR is not meant to be relied upon as a complete description of the Debtors, their business, condition (financial or otherwise), results of operations, prospects, assets or liabilities. The Debtors reserve all rights to revise this report.

 

1.               This MOR is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). This MOR should be read in conjunction with the financial statements and accompanying notes in the Company’s annual and quarterly reports that were filed with the United States Securities and Exchange Commission.

 

2.               This MOR is not audited and will not be subject to audit or review by the Company’s external auditors at any time in the future.

 

3.               The professional fee disbursements presented in this report reflect the date of actual cash payments to professional service providers.  The Debtors have incurred additional professional fee expenses during the reporting period that will be reflected in future MORs, as cash payments are made to providers.

 

9


LEHMAN BROTHERS HOLDINGS INC.

Schedule of Professional Fee and Expense Disbursements (a)

March 2010

Unaudited ($ in thousands)

 

 

 

 

 

 

Filing Date

 

 

 

 

 

Mar-2010

 

Through Mar-2010 (b)

 

Debtors - Section 363 Professionals

 

 

 

 

 

 

 

Alvarez & Marsal LLC

 

Interim Management

 

$

15,508

 

$

262,166

 

Kelly Matthew Wright

 

Art Consultant and Auctioneer

 

—

 

50

(c)

Natixis Capital Markets Inc.

 

Derivatives Consultant

 

—

 

8,121

 

Debtors - Section 327 Professionals

 

 

 

 

 

 

 

Bingham McCutchen LLP

 

Special Counsel - Tax

 

706

 

10,319

 

Bortstein Legal LLC

 

Special Counsel - IT and Other Vendor Contracts

 

89

 

2,856

 

Curtis, Mallet-Prevost, Colt & Mosle LLP

 

Special Counsel - Conflicts

 

1,426

 

15,838

 

Discover Ready LLC

 

eDiscovery Services

 

—

 

6,894

(c)

Ernst & Young LLP

 

Audit and Tax Services

 

30

 

1,410

 

Hudson Global Resources

 

Contract Attorneys

 

266

 

3,010

(c)

Huron Consulting

 

Tax Services

 

—

 

2,007

 

Jones Day

 

Special Counsel - Asia and Domestic Litigation

 

2,343

 

20,483

 

Lazard Freres & Co.

 

Investment Banking Advisor

 

3,042

 

21,692

 

McKenna Long & Aldridge LLP

 

Special Counsel - Commercial Real Estate Lending

 

152

 

3,580

 

Pachulski Stang Ziehl & Jones

 

Special Counsel - Real Estate

 

61

 

777

 

Reilly Pozner LLP

 

Special Counsel - Mortgage Litigation and Claims

 

166

 

2,222

 

Simpson Thacher & Bartlett LLP

 

Special Counsel - SEC Reporting, Asset Sales, and Congressional Testimony

 

121

 

2,264

 

Weil Gotshal & Manges LLP

 

Lead Counsel

 

7,248

 

164,782

 

Windels Marx Lane & Mittendorf, LLP

 

Special Counsel - Real Estate

 

—

 

1,151

 

Debtors - Claims and Noticing Agent

 

 

 

 

 

 

 

Epiq Bankruptcy Solutions LLC

 

Claims Management and Noticing Agent

 

—

 

6,514

 

Creditors - Section 327 Professionals

 

 

 

 

 

 

 

FTI Consulting Inc.

 

Financial Advisor

 

4,013

(d)

26,411

 

Houlihan Lokey Howard & Zukin Capital Inc.

 

Investment Banking Advisor

 

333

 

6,691

 

Milbank Tweed Hadley & McCloy LLP

 

Lead Counsel

 

5,309

 

47,680

 

Quinn Emanuel Urquhart Oliver & Hedges LLP

 

Special Counsel - Conflicts

 

619

 

6,012

 

Richard Sheldon, Q.C.

 

Special Counsel - UK

 

—

 

74

 

Examiner - Section 327 Professionals

 

 

 

 

 

 

 

Duff & Phelps LLC

 

Financial Advisor

 

2,983

 

36,235

 

Jenner & Block LLP

 

Examiner

 

6,355

 

48,401

 

Fee Examiner

 

 

 

 

 

 

 

Feinberg Rozen LLP

 

Fee Examiner

 

76

 

645

 

Brown Greer Plc

 

Fee and Expense Analyst

 

10

 

144

 

Total Non-Ordinary Course Professionals

 

 

 

50,858

 

708,430

 

Debtors - Ordinary Course Professionals

 

 

 

1,081

 

22,523

 

US Trustee Quarterly Fees

 

 

 

—

 

624

 

Total Professional Fees and UST Fees (e)

 

 

 

$

51,939

 

$

731,577

 

(a)    All professional fees have been paid by LBHI; however, a portion has been charged back to debtor and non-debtor subsidiaries based on the direct costs associated with each entity and an allocation methodology.

(b)   The figures reflected in this table represent cash disbursements from LBHI’s filing date through the end of March 2010.  The figures do not include accruals.

(c)    Filing Date Through Mar-2010 balances for Kelly Matthew Wright, DiscoverReady LLC and Hudson Global Resources have been increased by $3 thousand, $2.1 million and $817 thousand, respectively, to account for payments made to these vendors from Dec-2009 to Feb-2010 which were not reflected in previous MORs.

(d)   Mar-2010 professional fee disbursements to FTI Consulting Inc. include $1.7 million that was previously reported in Feb-2010.

(e)    Excludes professional services rendered on behalf of non-debtor entities which are invoiced separately.

 

10


 

LEHMAN BROTHERS HOLDINGS INC., ET AL.

 

QUARTERLY HEDGING TRANSACTIONS UPDATE

AS OF MARCH 31, 2010

 

The information and data included in this report are derived from sources available to Lehman Brothers Holdings Inc. (“LBHI”) and its Controlled Entities (collectively, the “Company”).  The term “Controlled Entities” refers to those entities that are directly or indirectly controlled by LBHI, and excludes, among other things, those entities that are under separate administrations in the United States or abroad, including Lehman Brothers Inc., which is the subject of proceedings under the Securities Investor Protection Act.  LBHI and certain of its Controlled Entities have filed for protection under Chapter 11 of the Bankruptcy Code, and those entities are referred to herein as the “Debtors”. The Debtors’ Chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”).

 

On March 11, 2009, the United States Court for the Southern District of New York overseeing the Debtors’ Chapter 11 cases (the “Court”) entered an “Order Pursuant to Sections 105 and 364 of the Bankruptcy Code Authorizing the Debtors to Grant First Priority Liens in Cash Collateral Posted in Connection With the Hedging Transactions the Debtors Enter Into Through Certain Futures and Prime Brokerage Account” [Docket No. 3047] (the “Derivatives Hedging Order”).

 

On July 16, 2009 the Court entered a separate “Order Pursuant to Sections 105 and 364 of the Bankruptcy Code Authorizing the Debtors to Grant First Priority Liens in Collateral Posted in Connection With the Hedging Transactions” [Docket No. 4423] (the “Residential Loan Order”).

 

Terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Derivatives Hedging Order or the Residential Loan Order, as the case may be.

 

The Debtors have prepared this Quarterly Hedging Transactions Update, as required by the Derivatives Hedging Order, based on the information available to the Debtors at this time, but note that such information is partially based on market pricing which is subject to day-to-day fluctuations. The Debtors reserve all rights to revise this report.

 

Derivatives Hedging Order. Between the entry of the Derivatives Hedging Order and March 31, 2010 (the “Report Date”), the Debtors have proposed 12 Hedging Transactions to the Hedging Transactions Committee. As of the Report Date, the Debtors had executed all 12 Hedging Transactions and the current value of collateral posted approximates $286.6 million.   The Open Derivative Positions correspond to 77 non-terminated derivative contracts with an estimated recovery value as of the Report Date equal to $749 million. The expected recovery amounts are determined using various models, data sources, and certain assumptions regarding contract provisions.  The Company expects to adjust the amounts recorded for the Open Derivatives Positions in the future; such adjustments (including write-downs and write-offs) may be material.  For further description regarding derivative recovery values, please refer to the November 2009 Monthly Operating Report filed on December 14, 2009.

 

As of the Report Date, the Hedging Transactions were allocated to the individual Debtors as set forth on the following page.

 

Residential Loan Order.  Between the entry of the Residential Loan Order and the Report Date, there were no Residential Hedging Transactions.

 

11


 

Lehman Brothers Holdings Inc.

As of March 31, 2010

Derivatives Hedging Order

Quarterly Hedging Report

 

Debtor

 

Value of Collateral
Posted for Hedging
Transactions (a)

 

Estimated Recovery
Value of Receivables
Being Hedged

 

 

 

 

 

 

 

Lehman Brothers Special Financing Inc. (“LBSF”)

 

$

275,800,000

 

$

737,000,000

 

Lehman Brothers Financial Products (“LBFP”)

 

10,800,000

 

12,000,000

 

 

 

 

 

 

 

Total (b)

 

$

286,600,000

 

$

749,000,000

 

(a)   Value of collateral represents cash collateral posted, net of any gains or losses on hedging transactions.  This presentation differs from disclosure in previously filed quarterly hedging updates where only the total amount of cash posted was reported.

 

(b)   Separately, on January 14, 2010, the Court entered an “Order Granting LBHI's Motion for Authorization, Pursuant to Sections 105, 363 and 364 of the Bankruptcy Code, To Sell Certain Asset Backed-Securities and Related Relief”, which authorized the Company to enter into hedging transactions to hedge against the loss of value from fluctuations in foreign exchange rates, as set out below.

 

Debtor

 

Value of Collateral
Posted for Hedging
Transactions

 

Estimated Recovery
Value of Receivables
Being Hedged

 

 

 

 

 

 

 

Lehman Brothers Holdings Inc. (“LBHI”)

 

$

12,000,000

 

$

178,000,000

 

 

 

 

 

 

 

Total

 

$

12,000,000

 

$

178,000,000

 

 

12