Hong Kong: Motions for Omnibus Objections to Claims against Lehman Brothers Holdings Inc. and associated Debtors filed with the US Bankruptcy Court

Last Updated: 26 May 2010
Most Read Contributor in Hong Kong, October 2018

Article by Steven Miller , Iain G.O. Melville and Richard M. Tollan

Originally published 26 May 2010

Keywords: Omnibus objections, claims, Lehman Brothers, US Bankruptcy Court

On 18 May 2010, Lehman Brothers Holdings Inc. and its associated debtors (together, the "Debtors") filed a further six omnibus objections to claims filed in their Chapter 11 proceedings with the US Bankruptcy Court (the "Objections"). The Objections contain orders prepared by the Debtors on behalf of the US Bankruptcy Court which, if granted, will enable the Debtors to disallow and expunge the claims identified in each of the Objections from the register of claims.

Creditors who have filed claims against any of the Debtors should review the Objections and exhibits to determine whether any of the Objections affect their claims. Copies of the Objections may be obtained from the Lehman Brothers website:

http://chap11.epiqsystems.com/LBH/docket/Default.aspx?rc=1&DMWin=63df57fb-e93a-4ecc-8a44-16028f89c6c1

Categories of claims subject to omnibus objections:

The grounds upon which the Debtors seek to disallow or expunge objected claims are set forth in the draft orders attached to each of the Objections and can be summarised as follows:

  1. Amended and restated claims:

    Under the Debtors' 10th, 11th and 14th Objections, earlier claims that have been superseded by at least one subsequently-filed claim in respect of the same liability will be disallowed in order to prevent any creditor recovering more than once in respect of the same liability. The corresponding subsequent claims are identified in Exhibit A as the 'Surviving Claims'.

    The proposed disallowance of the amended and restated claims will not affect any of the subsequent 'Surviving Claims'.
  2. Duplicate or substantially duplicative claims:

    Under the Debtors' 12th and 13th Objections, claims that are duplicates or are substantially duplicative of other claims will be disallowed in order to prevent any creditor recovering more than once in respect of the same liability.

    A claim may be considered a duplicate where it has been filed by the same creditor in respect of the same liabilities and for the same US Dollar amounts. Exhibit A to each of the 12th and 13th Objections identifies the relevant claims that the Debtors have identified as duplicative (under the heading 'Claims to be Disallowed or Expunged') of the corresponding 'Surviving Claims'.

    The proposed disallowance of the duplicative claims will not affect any of the subsequent 'Surviving Claims'.
  3. Foreign currency and inadequately substantiated claims:

    Under the Debtors' 15th and 16th Objections, any claims that were not denominated in United States Dollars, or in respect of which inadequate supporting documentation has been provided will be disallowed and expunged from the claims register in their entirety.

    The Debtors' motion to disallow and expunge all claims not in United States Dollars is based upon the requirements set forth in the US Bankruptcy Court's order dated 2 July 2009 (publicly available at www.lehman-docket.com) (the "Bar Date Order"). The Bar Date Order provides (at paragraph 6) that "each proof of claim must...(ii) be denominated in the lawful currency of the United States...[and] ... (vi) include supporting documentation or an explanation as to why documentation is not available...".

    In contrast to the grounds for the other Objections described above, the Debtors' motion to disallow and expunge foreign currency and insufficiently documented claims, if granted, will extinguish creditors' claims entirely. This is specifically provided for in the Bar Date Order, which states that "...any holder of a claim against the Debtors who is required, but fails to file a proof of such claim in accordance with the Bar Date Order on or before the Bar Date....shall be forever barred, estopped, and enjoined from asserting such claim against the debtors (or filing a proof of claim with respect thereto)".

Reponses to be filed by 17 June 2010:

Creditors whose claims fall within the scope of the Objections are required to file responses with the US Bankruptcy Court by 17 June 2010 at 4:00 p.m. (Eastern Time). Instructions for responding to the Objections are set out therein.

Should no responses be received in respect of the Objections by June 17, the US Bankruptcy Court will be at liberty to grant the draft orders without further notice to the creditors or opportunity to be heard.

Hearing:

United States Bankruptcy Judge, the Honourable James M. Peck is scheduled to consider the Objections at a hearing on 29 June 2010 at 11:00 a.m. (Eastern Time) in courtroom 601 of the United States Bankruptcy Court for the Southern District of New York, One Bowling Green, New York, New York 10004.

Learn more about our Hong Kong officeand Restructuring, Bankruptcy & Insolvency practice.

Visit us at www.mayerbrownjsm.com

Copyright 2010. JSM, Mayer Brown International LLP and/or Mayer Brown LLP. All rights reserved. Mayer Brown is a global legal services organization comprising legal practices that are separate entities ("Mayer Brown Practices"). The Mayer Brown Practices are: JSM, a Hong Kong partnership, and its associated entities in Asia; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and Mayer Brown LLP, a limited liability partnership established in the United States. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

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