Lehman amends bankruptcy plan

Bankrupt financial company Lehman
Brothers proposed a new plan for divvying up billions of dollars among its
creditors and offered a bigger payment to bondholders, provided they sign on. 

 The plan-key to Lehman’s exit
from the largest bankruptcy in U.S. history, comes after an earlier version
filed in April met strong opposition from hedge fund Paulson & Co, the California
Public Employees Retirement System (Calpers) and other bondholders. 

 The plan proposed increasing
payments to the holding company’s senior unsecured creditors, which includes
the bondholders, to 21.4 per cent of their claims from 14.7 per cent, but
there’s a catch: they must vote to accept the plan. 

 In addition, those holding
derivative and general unsecured claims against the holding company must also
vote to accept the plan, a move that appears aimed at avoiding a lengthy court

 If one of those three
creditor groups rejects the plan, they all receive lower proposed payments of between
15 per cent and 17 per cent. 

 The ad-hoc group of
bondholders, which says it has about $20 billion of claims, had objected to
Lehman’s previous plan saying that it favoured large banks who were creditors
of the derivatives business over other creditors. 

 Creditors need to vote in
favour of the plan before it goes to Judge James Peck for approval some time
later this year. 

 Lehman will be able to begin
paying them back after receiving that approval.