Bank of America Is Said to Be Selling Lehman Claim

Bank of America Is Said to Be Selling Lehman Claim

Oct. 8 (Bloomberg) -- Bank of America Corp. is selling a claim with a face value of about $800 million that it holds against bankrupt Lehman Brothers Holdings Inc., people familiar with the matter said.

Hedge funds are the likely buyers of the claim, according to the people, who asked not to be identified because the transaction is private. Morgan Stanley last month sold a $1.3 billion Lehman claim to several investors for 38 cents on the dollar and Credit Suisse Group AG was trying to sell a $1 billion claim.

Creditors from sovereign wealth funds to sports teams submitted more than 16,000 claims against Lehman before a Sept. 22 deadline. Bank of America, based in Charlotte, North Carolina, filed a $2.86 billion claim, and its Merrill Lynch International unit filed one for $1.54 billion it said was tied to swap agreements, according to records.

Lehman claims with similar terms are currently selling for about 37 cents on the dollar, the people said.

The largest claim Lehman faces, for at least $48.8 billion, was filed by Wilmington Trust Co. as indenture trustee for various Lehman senior notes, according to the Lehman claim administrator, EPIQ Systems Inc. Wilmington Trust said its claim may be as much as $73.2 billion.

Shirley Norton, a Bank of America spokeswoman, and Kimberly Macleod, a Lehman spokeswoman, declined to comment.

Goldman Sachs Claims

Creditors of a bankrupt company have to wait until after a bankruptcy plan is confirmed by the court to receive distributions, so some sell their claims to get paid faster.

Goldman Sachs Lending Partners LLC has acquired claims with a total face value of at least $150 million from funds such as TPG-Axon Partners LP and III Credit Bias Hub Fund Ltd., according to court records filed since Sept. 29.

The records indicate normal market-making activity, Goldman Sachs spokesman Samuel Robinson said.

Last month, U.S Bankruptcy Judge James Peck ordered that disputes between Lehman and counterparties over derivative and swap contract claims must go to mediation. Lehman had more than 900,000 derivative contracts outstanding when it filed for bankruptcy and the New York-based bank said mediation would save money and time in resolving its complex Chapter 11 case. Some counterparties argued mediation would limit their rights.

Lehman, once the fourth-largest investment bank, filed the largest bankruptcy in U.S. history, listing assets of $639 billion in its petition in September 2008. The company said it had $613 billion in debt.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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