Lehman Bankruptcy Takes Big Step Toward an End

A federal bankruptcy judge has blessed a plan by Lehman Brothers‘ bankruptcy estate to pay out about $65 billion to creditors, in a major step to wind down the investment bank. The approval by Judge James M. Peck of the federal bankruptcy court in Manhattan, who has overseen Lehman’s Chapter 11 case, paves the way for a vote by creditors sometime this fall. The proposed payout plan will offer creditors an average recovery of about 20 cents on the dollar — higher than estimates of 17 to 18 cents on the dollar from earlier this year.

The labyrinthine disclosure statement — months in the making — followed clashes between Lehman and its bondholders and other institutions to which the firm owes billions of dollars. Lehman revised the scheme several times in order to earn the support of several major creditors, including Paulson & Company, Elliott Management and Goldman Sachs.

Lehman’s disclosure statement for the plan will be sent to the estate’s 110,000 creditors, who will have 60 days to vote. A confirmation hearing is scheduled for Dec. 6, pending approval by creditors….

http://dealbook.nytimes.com/2011/08/30/lehman-bankruptcy-takes-big-step-toward-an-end/?nl=business&emc=dlbkpma2