Big Lehman creditor group backs bankruptcy plan

Lehman Brothers Holdings Inc said creditors holding more than USD 100 billion of claims now support its reorganization plan, moving the company closer to emerging from the largest-ever US bankruptcy.

Thirty banks, hedge funds and other creditors agreed in writing to support the Chapter 11 plan filed earlier this week by what remains of the fourth-largest US investment bank, Lehman said on Friday.

Lehman said the creditors include "substantially all" supporters of two competing reorganization plans. Among these are the hedge fund firm Paulson & Co, Goldman Sachs Group Inc and hedge fund firm Silver Point Capital LP.

These supporters agreed not to pursue their plans so long as Lehman's plan retains enough creditor support and Lehman emerges from bankruptcy by March 31, 2012, court records show.

Lehman hopes to distribute about USD 65 billion to creditors holding an estimated USD 322 billion of allowed claims.

Bryan Marsal, Lehman's chief executive, called Lehman's plan a "fair and reasonable" compromise that will speed up the bankruptcy process and avoid protracted litigation.

It is not immediately clear how much additional creditor support Lehman might need to win approval for its plan. A Lehman spokeswoman declined to comment.

Lehman filed for bankruptcy protection on September 15, 2008, with an estimated USD 639 billion of assets. Its filing was a major trigger for the global financial crisis.

Under Lehman's plan, holders of unsecured debt from the parent company would receive 21.1 cents on the dollar, while unsecured creditors of the Lehman Brothers Special Financing Inc derivatives unit would receive 27.9 cents on the dollar.

Supporters of the plan include units of Barclays Plc, which bought most of Lehman's investment bank but has battled Lehman in court over billions of dollars of assets.

Other supporters include Deutsche Bank AG, Royal Bank of Scotland Group Plc, French bank Societe Generale, and units of Credit Suisse Group AG and Morgan Stanley, court documents show.

Lehman said it also reached accords with seven of 13 institutions with derivatives claims, and expects to enter an agreement with another bank with USD 9.6 billion of such claims.

US Bankruptcy Judge James Peck in Manhattan must approve any reorganization plan. A hearing to authorize submitting Lehman's plan to creditors for a vote is set for August 30.