8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

January 13, 2011

LEHMAN BROTHERS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	1-9466	13-3216325
(State or other jurisdiction Of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1271 Avenue of the Americas

New York, New York

10020

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code:

(646) 285-9000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01 Other Events.

On January 13, 2011, representatives of Lehman Brothers Holdings Inc. (the “Registrant”) will participate in a hearing at the United States Bankruptcy Court (the “Court”) where they will present to the Court an updated status report of the Registrant’s bankruptcy proceedings. A presentation, attached hereto as Exhibit 99.1, will be provided at the hearing as background information.

ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Lehman Brothers Holdings Inc. – Plan Status Report, dated January 13, 2011.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LEHMAN BROTHERS HOLDINGS INC.
Date: January 13, 2011	By:	/s/ William J. Fox
	Name:	William J. Fox
	Title:	Chief Financial Officer and Executive Vice President

EXHIBIT INDEX

Exhibit No.	Description
99.1	Lehman Brothers Holdings Inc. – Plan Status Report, dated January 13, 2011.

EX-99.1

©

Copyright 2011. Alvarez & Marsal Holdings, LLC. All Rights Reserved.

L E A D E R S H I P 

P R O B L E M  SO L V I N G 

V A L U E  C R E A T I O N

Lehman Brothers Holdings Inc.

Plan Status Report

January 13, 2011

Exhibit  99.1

1

The

information

and

data

included

in

this

report

are

derived

from

sources

available

to

Lehman

Brothers

Holdings

Inc.

and

its

subsidiaries

that

have

filed

proceedings

under

chapter

11

of

the

Bankruptcy

Code

(collectively,

the

"Debtors").

The

Debtors

have

prepared

this

presentation

based

on

the

information

available

to

them

at

this

time,

but

note

that

such

information

is

incomplete

and

may

be

materially

deficient

in

certain

respects.

This

report

was

prepared

by

the

Debtors

for

purposes

of

presenting

the

Court

with

a

status

of

their

respective

estates

as

of

the

date

of

the

presentation

and

is

not

meant

to

be

relied

upon

by

investors

or

others

as

a

complete

description

of

the

Debtors’

estates,

businesses,

condition

(financial

or

otherwise),

results

of

operations,

prospects,

assets

or

liabilities.

The

information

in

this

presentation

may

only

be

updated,

including

any

corrections,

in

connection

with

future

presentations

or filings with

the

Court.

Certain

prior

period

balances

in

this presentation may have

changed from amounts

previously

presented,

which

may

be

a

result

of

certain reclassifications made;

refer to the footnotes herein accordingly. The Debtors reserve all rights to revise this report. All

amounts are

unaudited

and

subject

to

revision.

This

report

is

also available

on

the

website

that

hosts

information

about

the

Debtors

at

www.lehman-

docket.com.

This

report

should

also

be

read

in

conjunction

with

Monthly

Operating

Reports

(“MORs”)

and

other

reports

filed

with

the

SEC

and

the

Court.

These

reports

can

also

be

located

at

www.lehman-

docket.com.

January 13, 2011

Lehman Brothers Holdings Inc.

2

Key Questions Surrounding the Plan

I.

What is the size and composition of the asset pie?

II.

What does the claims picture look like?

III.

How do you propose for the asset pie to be allocated?

IV.

Any key remaining challenges once the Plan gains consensus?

3

I.

What is the Size and Composition of the Asset Pie?

($ in billions)

6/30/10

(4)

12/31/10

Cash

21.1

$

24.0

$

Financial Assets

(1)

38.2

37.1

Projected Reinvestment

(1.8)

(1.0)

Estimated Net Recovery

(3)

57.5

$

60.1

$

Notes:

(1)

(3)

(4)

Estimate of gross proceeds on future asset dispositions and foreign receivables

No litigation recovery included, and excludes future cost of operations

As presented at the September 22, 2010 State of the Estate

(2)

(2)

Excludes cash disbursements of approximately $600 million related to the Bank Settlements in November 2010

A.

What

is

the

Status

of

Further

Asset

Liquidations?

Market for sale or refinancing continues to improve

•

Commercial / multi-family cap rates approaching mid-2008 levels

•

M&A activity and refinancing has picked up

Opportunity cost much more attractive today than in the past

•

Bankruptcy reinvestment rate on cash of less than 50 bps is unattractive

Expect more opportunistic disposition activity over next 12 months, particularly in the area of

strategic real estate assets

4

I.

What is the Size and Composition of the Asset Pie? (cont’d)

B.

What

Resources

are

Employed?

5

I.

What is the Size and Composition of the Asset Pie? (cont’d)

Asset Management Resources (FTEs)

Actual

Actual

Proj.

Proj.

12/31/09

12/31/10

3/31/11

6/30/11

Lehman

215

219

207

206

A&M

39

33

24

17

Total

254

252

231

223

6

II.

What Does the Claims Picture Look Like?

($ in billions)

April 14, 2010

September 22, 2010

Adjusted

Likely

Adjusted

Likely

Adjusted

Likely

Claims

Outstanding

Allowed

Outstanding

Allowed

Outstanding

Allowed

LBHI:

As Filed

Claims

Claims

Claims

Claims

Claims

Claims

Direct Claims

$210

$183

$102

$112

$112

$111

$111

Intercompany Claims

80

56

43

59

43

53

52

Third-Party Guarantee Claims:

Domestic Primary Obligor

48

21

46

22

30

30

International Primary Obligor

95

73

72

66

67

67

Total Third-Party Guarantee Claims

255

143

94

118

88

97

97

Affiliate Guarantee Claims:

Domestic Primary Obligor

23

8

6

International Primary Obligor

201

66

52

Total Affiliate Guarantee Claims

315

224

21

74

21

58

12

Total Claims Against LBHI

860

605

260

363

264

319

272

Total Claims Against All Other Debtors

302

135

135

101

101

50

50

Total Claims*

$1,162

$740

$395

$464

$365

$369

$322

*Epiq

claims currently at $775 billion.

December 31, 2010

7

A.   What

Resources

are

Employed?

II.

What Does the Claims Picture Look Like? (cont’d)

Claims and General Administrative Resources (FTEs)

A&M

Lehman

A&M

Lehman

A&M

Lehman

A&M

Lehman

Claims Management

23

158

27

146

22

126

19

120

Finance, Tax and IT

43

119

24

121

19

132

16

132

Admin & Risk Management

3

31

3

28

1

31

1

31

Legal / Litigation Support

16

17

16

19

8

19

7

19

Total Headcount

85

325

70

314

50

308

43

302

12/31/09

12/31/10

3/31/11

6/30/11

Actual

Actual

Proj.

Proj.

8

III.

How do You Propose for the Asset Pie to be Allocated?

A.

Recap

of

the

9/22/10

State

of

the

Estate

Priorities announced at the State of the Estate:

•

Continued focus on claims assessment

•

Continued focus on foreign affiliates to obtain Plan support

•

Engage domestic creditor constituents

9

B.

Foreign

Affiliates

Substantial progress has been made:

•

Two additional Global Protocol meetings bringing total to seven group meetings

dedicated to the LBHI Plan

•

Exchange of proposals for terms of settlement agreements to be executed by

foreign affiliates

Bilateral negotiations have progressed

III. How do You Propose for the Asset Pie to be Allocated? (cont’d)

10

C.

Domestic Affiliates

Primary focus since 9/22/10 has been to work with the Unsecured Creditors Committee

to develop a common approach to a compromise plan that is thoughtful and fair to all

stakeholders

Additionally, as a result of numerous and exhaustive meetings, received input from major

creditors and their advisors as to Plan concepts

•

On

December

15,

2010,

LBHI

Ad-hoc

group

filed

a

proposed

chapter

11

plan

based

upon substantive consolidation

•

Other creditor groups have provided settlement frameworks providing for non-

consolidation plans

•

In developing the proposed Plan, the Debtors have taken into account input from the

major constituents, including LBHI, LCPI, LBCS, and LBSF creditor groups and the

Unsecured Creditors’

Committee

Communications with LBI over issues has improved, but progressing slowly

Based

upon

input

received

from

major

constituencies,

the

Debtors

understand

the

legal and economic positions of such constituencies

III. How do You Propose for the Asset Pie to be Allocated?

(cont’d)

11

D.

Overview

of

Proposed

First

Amended

Plan

The Plan will encompass an economic compromise of creditor claims and provides for a

two step framework:

–

Creditors of certain of the subsidiary Debtors will have a percentage of their

recoveries reallocated to the LBHI Senior Unsecured and General Unsecured

creditors

–

Creditors of the subsidiary Debtors with guarantee claims against LBHI will have a

percentage of their recoveries reallocated to the LBHI Senior Unsecured and General

Unsecured creditors

–

Non

trading

intercompany

claims

of

LBHI

against

subsidiary

Debtors

will

be

reduced

by a certain percentage

III. How do You Propose for the Asset Pie to be Allocated?

(cont’d)

•

Settlement compromise between the Senior and General Unsecured

Creditors of LBHI and the creditors of subsidiary Debtors

12

D.

Overview

of

Proposed

First

Amended

Plan

(cont’d)

–

Creditors of foreign affiliates with a guarantee claim against LBHI will have a

percentage of their recoveries reallocated to the LBHI Senior Unsecured and General

Unsecured creditors

–

Foreign

Affiliate

Guarantee

Claims

against

LBHI

will

be

reduced

depending

on

the

type of guarantee claim

III. How do You Propose for the Asset Pie to be Allocated?

(cont’d)

•

Settlement compromise between the Debtors and the Foreign Affiliates

13

E.

Conclusion

Since March 2010 the Debtors have refined:

•

the fact base and legal analysis as to the enforceability of various guarantee

claims

•

their understanding of the positions taken by the numerous Lehman constituents

•

their

estimate

of

the

overall

claims,

especially

foreign

guarantee

claims

The Plan proposes that every creditor constituency agree to provide concessions to

obviate extended litigation, expense and loss of time

The

proposed

concessions

will

result

in

a

fair

resolution

of

all

issues

All parties should recognize that a lack of flexibility may be detrimental to their

economic interests

III. How do You Propose for the Asset Pie to be Allocated? (cont’d)

14

F.   Timetable -

Next Steps

Amended Plan and Amended Disclosure Statement should be filed within days 

Debtors will review and discuss the Amended Plan with the key constituents in the

days and weeks following the filing

Prosecution

of

the

Amended

Plan

will

be

dependent

on

Plan

support

and

the

Court’s

calendar

III. How do You Propose for the Asset Pie to be Allocated? (cont’d)

15

A significant amount of filed claims remains unresolved

LBSF and the other estates with derivative assets have made significant progress on

the asset (or receivable) collection process

The key challenge is to find a fair and cost effective way to resolve derivative claim

disputes

Proposed solution = Derivatives Settlement Framework

IV. Any Key Remaining Challenges, Once the Plan Gains Consensus?

16

IV.

Key Remaining Challenge (cont’d)

Future claims resolution more challenging as a result of (i) difficult legal and valuation issues; and (ii)

larger trade populations remaining (i.e., Big Banks)

Two options:

(i)

Continue

claims

resolution

on

a

contract

by

contract

basis

using

limited

tools

available

(ADR)

to

avoid drawn-out costly litigation

(ii)

Resolve valuations for all derivative claims concurrently and uniformly through a Derivative

Settlement Framework to be proposed in the Plan

Note: (1) Derivative claims are claims prior to adjustments for management estimates.

Derivatives Claims Update

($ in millions)

Claims

Contracts

Trades

Derivative Claims (1)

$45,311

2,961

961,436

Settled

$5,040

1,561

69,684

Remaining

$40,271

1,400

891,752

Big Banks (share % of claims)

48%

5%

85%

17

IV.

Key Remaining Challenge (cont’d)

The Derivatives Claims Settlement Framework concept was developed in collaboration

with certain of the Big Banks and the UCC

The Derivative Claims Settlement Framework provides for:

Derivative Claims Settlement Rules

–

At mid-market price

–

Using defined portfolio aggregation rules

–

Applying an allowance for bid / ask as determined by Debtor

•

Derivative claims settlement rules

•

A commitment to creditors to a process and timeline

•

The proposed framework provides consistent, transparent, derivative valuation

rules applicable to all remaining derivative contracts

•

Remaining Derivative contracts valued by Debtor:

•

At end of day at Termination Date, unless counterparty can satisfactorily prove

to Debtor on economic close out at a different time on the Termination Date

18

IV.

Key Remaining Challenge (cont’d)

Exceptions to the Rules

•

Commercially reasonable replacement of trade at Termination Date

•

Commercially reasonable Market Quotation Process (1992 ISDA) at Termination

Date

19

IV.

Key Remaining Challenge (cont’d)

Process and Timeline

•

Claims

valuation

rules

to

be

developed

in

collaboration

with

the

UCC

with

feedback

from key market participants (certain Big Banks)

•

Framework to be applied to all unsettled derivative claims through the Plan with the

creation of separate derivative creditor claims class for each of the derivative entities

(LBSF, LBCS, LBCC, etc.)

•

Commitment to a timeline that will provide rules and result of rules by April 30, 2011

20

IV.

Key Remaining Challenge (cont’d)

Key Benefits of Settlement Framework

•

Uniformity –

Consistent rules to apply to valuation of all derivative claims

•

Transparency –

Rules will be published and claims valuations can be reviewed

•

Expediency –

Avoid years of litigation

•

Consensual Approach –

Rules developed in collaboration with UCC with feedback from

key market players

Settlement Framework will require a compromise by many of the derivative

claimants, but the claimants should recognize that the benefits outweigh the

compromise required