Lehman Brothers hails new deal with creditors

Lehman Brothers, the investment bank whose collapse triggered the global financial crisis, said on Friday it had reached a deal with creditors vying for $65 billion of the failed bank's assets. The agreement has the support of 30 institutions and their affiliates who hold claims totalling more than $100 billion, Lehman Brothers Holdings Inc., the bank's parent company, said in a statement. The plan commands broader support from creditors than two previous versions and marks a significant step forward to resolving the largest bankruptcy case in history, the company said. Creditors have demanded a total of $325 billion from Lehman Brothers, which collapsed on September 15, 2008, after its risky bets on the US housing market turned bad, sending shockwaves through the world banking system. "This amended plan is based on intensive discussions, analysis and input from many parties," Bryan Marsal, the chief executive of Lehman Brothers Holdings Inc., said in the statement. "It provides for a global settlement with creditor groups and will avoid the costly, uncertain and protracted litigation that would undoubtedly follow in the absence of this compromise solution." Under the plan, which was filed this week with the US Bankruptcy Court in Manhattan, holders of $83 billion of bonds of Lehman's parent company would receive 21.1 cents on the dollar. While that is slightly less than the 21.4 cents on the dollar they had hoped to recoup, it is more than the 17.4 cents seen in a previous plan. Some creditors of Lehman Brothers' derivatives business would receive as much as 39 cents on the dollar for their claims. Lehman did not identify which creditors had agreed to support the new plan, but it said that all the institutions which had signed on to the two previous plans had committed to the new one.