Exhibit 99.1
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re: |
| Chapter 11 Case No. |
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Lehman Brothers Holdings Inc., et al., |
| 08-13555 |
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Debtors. |
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MONTHLY OPERATING REPORT
DECEMBER 2009
SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS
SCHEDULE OF PROFESSIONAL FEE AND EXPENSE DISBURSEMENTS
DEBTORS’ ADDRESS: | LEHMAN BROTHERS HOLDINGS INC. |
| c/o WILLIAM J. FOX |
| 1271 AVENUE OF THE AMERICAS |
| 35th FLOOR |
| NEW YORK, NY 10020 |
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DEBTORS’ ATTORNEYS: | WEIL, GOTSHAL & MANGES LLP |
| c/o SHAI WAISMAN |
| 767 FIFTH AVENUE |
| NEW YORK, NY 10153 |
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REPORT PREPARER: | LEHMAN BROTHERS HOLDINGS INC., A DEBTOR IN POSSESSION (IN THE SOUTHERN DISTRICT OF NEW YORK) |
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.
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| Lehman Brothers Holdings Inc. |
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Date: January 14, 2010 | By: | /s/ William J. Fox |
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| William J. Fox |
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| Executive Vice President |
Indicate if this is an amended statement by checking here: AMENDED STATEMENT o
TABLE OF CONTENTS
Schedule of Debtors | 3 |
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Lehman Brothers Holdings Inc. (“LBHI”) and Other Debtors and Other Controlled Subsidiaries |
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Basis of Presentation — Schedule of Cash Receipts and Disbursements | 4 |
Schedule of Cash Receipts and Disbursements | 5 |
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LBHI |
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Basis of Presentation — Schedule of Professional Fee and Expense Disbursements | 6 |
Schedule of Professional Fee and Expense Disbursements | 7 |
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LBHI |
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Quarterly Hedging Transactions Update | 8 |
Schedule of Hedging Transactions as of December 31, 2009 | 9 |
SCHEDULE OF DEBTORS
The following entities have filed for bankruptcy in the Southern District of New York:
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| Case No. |
| Date Filed |
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Lead Debtor: |
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Lehman Brothers Holdings Inc. (“LBHI”) |
| 08-13555 |
| 9/15/2008 |
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Related Debtors: |
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LB 745 LLC |
| 08-13600 |
| 9/16/2008 |
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PAMI Statler Arms LLC(1) |
| 08-13664 |
| 9/23/2008 |
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Lehman Brothers Commodity Services Inc. |
| 08-13885 |
| 10/3/2008 |
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Lehman Brothers Special Financing Inc. |
| 08-13888 |
| 10/3/2008 |
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Lehman Brothers OTC Derivatives Inc. |
| 08-13893 |
| 10/3/2008 |
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Lehman Brothers Derivative Products Inc. |
| 08-13899 |
| 10/5/2008 |
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Lehman Commercial Paper Inc. |
| 08-13900 |
| 10/5/2008 |
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Lehman Brothers Commercial Corporation |
| 08-13901 |
| 10/5/2008 |
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Lehman Brothers Financial Products Inc. |
| 08-13902 |
| 10/5/2008 |
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Lehman Scottish Finance L.P. |
| 08-13904 |
| 10/5/2008 |
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CES Aviation LLC |
| 08-13905 |
| 10/5/2008 |
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CES Aviation V LLC |
| 08-13906 |
| 10/5/2008 |
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CES Aviation IX LLC |
| 08-13907 |
| 10/5/2008 |
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East Dover Limited |
| 08-13908 |
| 10/5/2008 |
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Luxembourg Residential Properties Loan Finance S.a.r.l |
| 09-10108 |
| 1/7/2009 |
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BNC Mortgage LLC |
| 09-10137 |
| 1/9/2009 |
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LB Rose Ranch LLC |
| 09-10560 |
| 2/9/2009 |
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Structured Asset Securities Corporation |
| 09-10558 |
| 2/9/2009 |
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LB 2080 Kalakaua Owners LLC |
| 09-12516 |
| 4/23/2009 |
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Merit LLC |
| 09-17331 |
| 12/14/2009 |
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LB Somerset LLC |
| 09-17503 |
| 12/22/2009 |
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LB Preferred Somerset LLC |
| 09-17505 |
| 12/22/2009 |
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(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.
LEHMAN BROTHERS HOLDINGS INC., (“LBHI”), AND OTHER DEBTORS AND OTHER CONTROLLED ENTITIES
BASIS OF PRESENTATION
SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS
DECEMBER 1, 2009 TO DECEMBER 31, 2009
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 Debtors have prepared this presentation, 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 Monthly Operating Report, (“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. The 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 derivatives 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. Intercompany transfers between Lehman entities are listed as disbursements for the paying entity and receipts for the receiving entity.
8. The following entities have filed for protection under Chapter 11 of the Bankruptcy Code during the month of December and are included in the report herein:
a. Merit LLC – filed December 14, 2009.
b. LB Somerset LLC – filed December 22, 2009.
c. LB Preferred Somerset LLC – filed December 22, 2009.
LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities
Schedule of Cash Receipts and Disbursements
December 1, 2009 - December 31, 2009
Unaudited ($ in millions)
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| Beginning Cash & |
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| Ending Cash & |
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| Filing |
| Investments |
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| FX |
| Investments |
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Legal Entity |
| Date |
| (12/1/09) (a) |
| Receipts |
| Transfers (b) |
| Disbursements (c) |
| Fluctuation (d) |
| (12/31/09) (e) |
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Lehman Brothers Holdings Inc. |
| 9/15/2008 |
| $ | 2,474 |
| $ | 1,435 | (f) | $ | 5 |
| (939 | )(g) | $ | (10 | ) | $ | 2,964 |
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LB 745 LLC |
| 9/16/2008 |
| — |
| — |
| — |
| — |
| — |
| — |
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PAMI Statler Arms LLC |
| 9/23/2008 |
| — |
| — |
| — |
| — |
| — |
| — |
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Lehman Brothers Special Financing Inc. (“LBSF”) |
| 10/3/2008 |
| 5,118 |
| 571 |
| — |
| (278 | )(h) | (10 | ) | 5,401 |
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Lehman Brothers Commodity Services Inc. (“LBCS”) |
| 10/3/2008 |
| 1,176 |
| 44 |
| — |
| (21 | ) | (1 | ) | 1,198 |
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Lehman Brothers OTC Derivatives Inc (“LOTC”) |
| 10/3/2008 |
| 167 |
| 1 |
| — |
| — |
| — |
| 167 |
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Lehman Commercial Paper Inc. (“LCPI”) |
| 10/5/2008 |
| 3,546 |
| 897 | (i) | — |
| (812 | )(i) | (3 | ) | 3,628 |
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Lehman Brothers Commercial Corporation (“LBCC”) |
| 10/5/2008 |
| 472 |
| 15 |
| — |
| — |
| — |
| 488 |
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Lehman Brothers Derivative Products Inc. (“LBDP”) |
| 10/5/2008 |
| 387 |
| — |
| — |
| — |
| — |
| 387 |
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Lehman Brothers Financial Products Inc (“LBFP”) |
| 10/5/2008 |
| 426 |
| 1 |
| — |
| (2 | ) | — |
| 425 |
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CES Aviation LLC |
| 10/5/2008 |
| — |
| — |
| — |
| — |
| — |
| — |
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CES Aviation V LLC |
| 10/5/2008 |
| — |
| — |
| — |
| — |
| — |
| — |
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CES Aviation IX LLC |
| 10/5/2008 |
| — |
| — |
| — |
| — |
| — |
| — |
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East Dover Limited |
| 10/5/2008 |
| — |
| — |
| — |
| — |
| — |
| — |
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Lehman Scottish Finance L.P. |
| 10/5/2008 |
| 2 |
| — |
| — |
| — |
| — |
| 2 |
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Luxembourg Residential Properties Loan Finance |
| 1/7/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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BNC Mortgage LLC |
| 1/9/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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LB Rose Ranch LLC |
| 2/9/2009 |
| 1 |
| — |
| — |
| — |
| — |
| 1 |
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Structured Asset Securities Corporation (“SASCO”) |
| 2/9/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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LB 2080 Kalakaua Owners LLC |
| 4/23/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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Merit LLC |
| 12/14/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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LB Somerset LLC |
| 12/22/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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LB Preferred Somerset LLC |
| 12/22/2009 |
| — |
| — |
| — |
| — |
| — |
| — |
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Debtor Cash and Investment Flows - Domestically Managed (j) |
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| 13,769 |
| $ | 2,963 |
| $ | 5 |
| $ | (2,051 | ) | $ | (24 | ) | 14,661 |
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Non-Debtor Cash and Investment Balances - Domestically Managed (j) |
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| 1,987 |
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| 1,920 |
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Debtor and Non-Debtor Cash and Investment Balances - Foreign Managed (k) |
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| 576 |
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| 573 |
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Total Cash and Investment Balances |
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| $ | 16,332 |
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| $ | 17,154 |
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Notes: |
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(a) | Beginning Cash & Investments balance has been restated from November 30, 2009 closing balance by ($2 million) for LBSF. |
(b) | Reflects transfers from bank accounts managed in other regions to the US. |
(c) | $264 million was disbursed from subsidiaries of LBHI to reimburse LBHI for estimated operating expenses and professional fees which had been paid by LBHI from June 2009 to November 2009, and are subject to adjustment and true-up (LBSF $180 million, LCPI $41 million, LBCS 21 million, LBFP $1 million, and Non-Debtors $21 million). |
(d) | Reflects fluctuation in value in foreign currency bank accounts. |
(e) | Ending Cash and Investments balances include approximately $2.6 billion of cash associated with pledged assets, court order segregated accounts, funds administratively held by banks, and other identified funds which may not belong to the Debtor or non-Debtor subsidiaries. These amounts are preliminarily estimated as follows: Debtors - LBHI $215 million, LBSF $310 million, LBCS $33 million, LCPI $1.9 billion, LBCC $8 million, Lehman Scottish Finance $2 million; Non-Debtors $100 million; and International $98 million, and are subject to adjustment. Ending cash balances also exlcude approximately $414 million in cash posted as collateral for derivatives hedging activity; broken down as follows: LBSF $390 million, LBFP $15 million, and LBCS $10 million. 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. |
(f) | Includes $837 million in receipts from Aurora Bank associated with repayment of court approved repo financing transactions. On 12/31/09, there was $0 outstanding on the repo with Aurora Bank. Also includes $264 million in receipts from subsidiaries for estimated operating expenses and professional fees which had been paid by LBHI, and are subject to adjustment and true-up. |
(g) | Reflects ordinary course outflows and other court approved disbursements, including court approved disbursements to Aurora Bank for repo financing transactions of $606 million. |
(h) | Reflects $180 million transferred to LBHI for cost allocation, $71 million returned to a counterparty for a wire transfer sent in error in April 2009, $21 million posted as collateral for court approved hedging activity, and $6 million disbursements related to live trades. |
(i) | LCPI, in its capacity as loan agreement agent, receives and passes along principal and interest to loan syndicate participants. |
(j) | Represents bank accounts managed and reconciled by Lehman US operations, which may include cash associated with foreign entities. Foreign currency cash flows are reflected in USD equivalents. |
(k) | Represents bank accounts managed and reconciled by Lehman foreign operations. Ending balance of $573 million includes Asia balance of $464 million, South America balance of $26 million and Europe balance of $83 million. |
LEHMAN BROTHERS HOLDINGS INC. (“LBHI”)
BASIS OF PRESENTATION
SCHEDULE OF PROFESSIONAL FEE AND EXPENSE DISBURSEMENTS
DATED FROM FILING DATE TO DECEMBER 31, 2009
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 101(b) of the Federal Rules of Bankruptcy Procedure. The Debtors have prepared this presentation, as required by the Office of the United States Trustee, based on information from the Debtors internal systems, but note that such information may be incomplete in certain respects and the Debtors reserve all rights to revise this report. 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.
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.
LEHMAN BROTHERS HOLDINGS INC.
Schedule of Professional Fee and Expense Disbursements (a)
December 2009
Unaudited ($ in thousands)
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| Filing Date |
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| Dec-09 |
| Through Dec-09 (b) |
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Debtors - Section 363 Professionals |
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Alvarez & Marsal LLC |
| Interim Management |
| $ | 15,877 |
| $ | 218,297 |
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Kelly Matthew Wright |
| Art Consultant and Auctioneer |
| — |
| 47 |
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Natixis Capital Markets Inc. |
| Derivatives Consultant |
| 1,428 |
| 8,121 |
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Debtors - Section 327 Professionals |
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Bingham McCutchen LLP |
| Special Counsel - Tax |
| 590 |
| 8,516 |
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Bortstein Legal LLC |
| Special Counsel - IT and Other Vendor Contracts |
| 267 |
| 2,548 |
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Curtis, Mallet-Prevost, Colt & Mosle LLP |
| Special Counsel - Conflicts |
| 1,250 |
| 13,032 |
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Discover Ready LLC |
| eDiscovery Services |
| — |
| 4,812 |
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Ernst & Young LLP |
| Audit and Tax Services |
| 71 |
| 1,367 |
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Hudson Global Resources |
| Contract Attorneys |
| — |
| 1,928 |
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Huron Consulting |
| Tax Services |
| 155 |
| 1,973 |
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Jones Day |
| Special Counsel - Asia and Domestic Litigation |
| 1,952 |
| 14,292 |
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Lazard Freres & Co. |
| Investment Banking Advisor |
| 3,219 |
| 17,118 |
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McKenna Long & Aldridge LLP |
| Special Counsel - Commercial Real Estate Lending |
| 907 |
| 3,227 |
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Pachulski Stang Ziehl & Jones |
| Special Counsel - Real Estate |
| 124 |
| 661 |
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Reilly Pozner LLP |
| Special Counsel - Mortgage Litigation and Claims |
| 211 |
| 1,763 |
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Simpson Thacher & Bartlett LLP |
| Special Counsel - SEC Reporting, Asset Sales, and Congressional Testimony |
| 25 |
| 2,117 |
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Weil Gotshal & Manges LLP |
| Lead Counsel |
| — |
| 127,143 |
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Windels Marx Lane & Mittendorf, LLP |
| Special Counsel - Real Estate |
| 153 |
| 750 |
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Debtors - Claims and Noticing Agent |
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Epiq Bankruptcy Solutions LLC |
| Claims Management and Noticing Agent |
| 3,741 |
| 6,514 |
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Creditors - Section 327 Professionals |
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FTI Consulting Inc. |
| Financial Advisor |
| 4,355 |
| 20,625 |
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Houlihan Lokey Howard & Zukin Capital Inc. |
| Investment Banking Advisor |
| 487 |
| 5,683 |
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Milbank Tweed Hadley & McCloy LLP |
| Lead Counsel |
| 5,933 |
| 42,360 |
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Quinn Emanuel Urquhart Oliver & Hedges LLP |
| Special Counsel - Conflicts |
| 614 |
| 4,894 |
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Richard Sheldon, Q.C. |
| Special Counsel - UK |
| — |
| 74 |
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Examiner - Section 327 Professionals |
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Duff & Phelps LLC |
| Financial Advisor |
| 5,016 |
| 26,411 |
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Jenner & Block LLP |
| Examiner |
| 6,074 |
| 33,961 |
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Fee Examiner |
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Feinberg Rozen LLP |
| Fee Examiner |
| 75 |
| 418 |
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Brown Greer Plc |
| Fee and Expense Analyst |
| 87 |
| 87 |
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Total Non-Ordinary Course Professionals |
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| 52,612 |
| 568,741 |
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Debtors - Ordinary Course Professionals |
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| 2,280 |
| 19,134 |
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US Trustee Quarterly Fees |
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| — |
| 483 |
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Total Professional Fees and UST Fees |
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| $ | 54,892 |
| $ | 588,358 |
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(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 December 2009 and do not include holdback amounts required by court order for Non-Ordinary Course Professionals. The figures do not include accruals. |
LEHMAN BROTHERS HOLDINGS INC. (“LBHI”)
QUARTERLY HEDGING TRANSACTIONS UPDATE
AS OF DECEMBER 31, 2009
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.
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 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 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 Order, based on the information available to the Debtors at this time, but note that such presentation is partially based on market pricing which is subject to day-to-day fluctuations. The Debtors reserve all rights to revise this report.
Derivatives Order. Between the entry of the Derivatives Order and December 31, 2009 (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 posted an aggregate $414 million in cash collateral pursuant thereto. The Open Derivative Positions correspond to 100 un-terminated derivative contracts with an estimated recovery value as of the Report Date equal to $812 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 Derivative 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 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.
Lehman Brothers Holdings Inc.
As of December 31, 2009
Debtor |
| Collateral Posted |
| Estimated Recovery |
| ||
Lehman Brothers Special Financing Inc. (LBSF) |
| $ | 390,238,000 |
| $ | 802,757,351 |
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Lehman Brothers Financial Products (LBFP) |
| 14,500,000 |
| 2,669,285 |
| ||
Lehman Brothers Commodity Services (LBCS) |
| 9,500,000 |
| 6,931,010 |
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| $ | 414,238,000 |
| $ | 812,357,646 |
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