This briefing summarizes the recent U.S. Bankruptcy Court order establishing bar dates for creditors filing claims in relation to debts owed to them by Lehman Brothers entities in Chapter 11 bankruptcy proceedings. Specifically, this briefing discusses who must file a proof of claim, how to file the proof of claim, and the special requirements for claims in respect of derivative contracts, guarantees and Lehman program securities.
On July 2, 2009, the U.S. Bankruptcy Court for the Southern District of New York (the Bankruptcy Court) issued an order (the bar date order) establishing deadlines, or “bar dates”, for creditors that wish to file claims in relation to debts owed to them by Lehman Brothers Holdings Inc. and its affiliates (collectively, the debtors1) in U.S. Chapter 11 bankruptcy proceedings.
The bar date order establishes 5:00 p.m. (New York time) on September 22, 2009 as the deadline for a creditor to file a proof of claim in accordance with the procedures established in the bar date order. The bar date order establishes a separate deadline of 5:00 p.m. (New York time) on November 2, 2009, and separate procedures for a creditor to file a proof of claim, in relation to “Lehman program securities”2 and related guarantees.
Who must file a proof of claim
A creditor with a prepetition claim that fails to file a proof of claim by the relevant bar date and comply with any related formalities by the relevant deadline will, among other things, lose its right to assert such claim against the debtors. According to the bar date order, the following creditors are not required to file a proof of claim:
- any creditor whose claim is listed in the relevant debtor’s schedule of liabilities and (i) whose claim is not described as “disputed”, “contingent” or “unliquidated” and (ii) that does not dispute the claim in any way;
- any creditor whose claim has been paid in full by the debtors;
- certain shareholders of, and holders of partnership interests, warrants and stock options in, the debtors;
- any creditor that holds a claim that has already been allowed by the Bankruptcy Court;
- any creditor that is subject to a separate deadline;
- any creditor that has already properly filed a proof of claim;3
- any creditor with a claim against Lehman Brothers Inc. or a Lehman entity involved in a foreign bankruptcy proceeding, unless such claim is guaranteed by a debtor;
- any holder of a security listed on the “master list of securities” available at www.lehman-docket.com, because a global claim on behalf of the holders of such securities will be made in respect of such securities by the relevant indenture trustee;4 and any entity included on the “exempt entities list” available atwww.lehman-docket.com and any relevant subsidiary of such entity.
Each of the above classes of creditor is described further in the bar date order.
How to file a proof of claim
The bar date order establishes detailed procedures for filing a proof of claim. The procedures vary for different types of claims. In general, the proof of claim form provided in the bar date order must be completed and be actually received by Epiq Bankruptcy Solutions LLC or the Bankruptcy Court via mail or hand delivery on or before the relevant bar date.5 A creditor claiming against more than one debtor must file a separate proof of claim with respect to each separate debtor. The proof of claim form must:
- set forth a claim written in English
- set forth a claim denominated in U.S. dollars;
- conform substantially with the court-approved form attached to the bar date order;
- state the name and case number of the debtor against which it is filed;
- set forth the legal and factual basis for the alleged claim;
- include supporting documentation or an explanation of why documentation is not available; and
- be signed by the claimant or an authorized agent of the claimant.
Claims in respect of derivative contracts
If a claim is based on a derivative contract, a creditor must, in addition to filing a proof of claim form by the relevant bar date, complete an electronic questionnaire (the derivative questionnaire) with detailed information regarding the relevant transaction, and electronically upload supporting documentation, by October 22, 2009 at 5:00 p.m. (New York time).6
The bar date order defines a “derivative contract” as a “swap agreement” or a “forward contract”, as these terms are defined in the U.S. Bankruptcy Code. The bar date order provides that the following do not constitute “derivative contracts”: (i) a cash-market purchase or sale of a security or loan, exchange-traded future or option, securities loan transaction, repurchase agreement in respect of securities or loans, and any guarantee or reimbursement obligation that would otherwise be included in the U.S. Bankruptcy Code’s definition of “swap agreement” or “forward contract”; (ii) a note, bond, or other security issued by the debtors or their affiliates7; and (iii) a security listed on the “master list of securities” or the list of Lehman programs securities. Therefore, creditors making a claim in respect of such instruments are not required to file a derivative questionnaire in relation to their proof of claim.
Claims in respect of guarantees
If a claim arises out of a guarantee provided by a debtor, including a guarantee in respect of a derivative, the relevant creditor must, in addition to filing a proof of claim form by the relevant bar date, complete an electronic questionnaire (the guarantee questionnaire) with detailed information regarding the relevant transaction, and electronically upload supporting documentation, by October 22, 2009 at 5:00 p.m. (New York time).
Claims in respect of Lehman program securities
The bar date order establishes a separate claims procedure for claims in relation to “Lehman program securities” and related guarantees. The bar date for such claims is November 2, 2009 at 5:00 p.m. (New York time). The debtors, in co-ordination with the Creditors’ Committee, will create a different proof of claim form tailored for such claims. A proposed list of Lehman program securities can be found at www. lehman-docket.com. The bar date order required the debtors, the Creditor’s Committee, the account holders or the holders of any Lehman program security and certain other parties to work in good faith to agree on a revised list no later than July 13, 2009. The creditors have indicated a willingness to discuss omissions from the revised list. The bar date order provides that the list is to be deemed final on July 17, 2009, at 5:00 p.m. (New York time). The bar date order also provides that the debtors must give notice of the bar date order and the bar date for Lehman programs securities by mail and/or e-mail on or before July 27, 2009 to the U.S. Trustee, the clearing systems and each of the issuers of the Lehman programs securities. The debtors must then request the clearing systems to distribute notice of the bar date to accountholders and holders of Lehman programs securities.
A creditor that files a claim in connection with a Lehman program security need not attach or submit any documentation supporting the claim; however, the debtors have reserved the right to seek production of all documentation required in view of the subsequent claims reconciliation process. Claims submitted in respect of any Lehman program security must, among other things, specify either a Euroclear electronic instruction reference number or a Clearstream blocking reference number. A creditor that files a claim based on both a Lehman program security and any other claim will not be required to complete the guarantee questionnaire or derivative questionnaire in respect of the portion of the claim that relates to such Lehman program security. Claims in respect of Lehman program securities will not be disallowed on the ground that such claims were not filed by the proper party or an authorized agent, and creditors that file claims on behalf of multiple account holders will not be required to provide information identifying such account holders. These provisions allow custodians and other securities intermediaries to file blanket claims on behalf of their clients. The filing entity is the claimant for purposes of the claim and will receive any payment due in the bankruptcy in respect of such claim. The bar date order does not prevent a holder of a Lehman program security that has filed a proof of claim from buying or selling claims based on a Lehman program security.