Friday in New York, the remains of Lehman Brothers Holdings Inc. will ask U.S. Bankruptcy Court Judge James Peck to sign off on a settlement resolving Fannie Mae's (FNMA) $18.9 billion claim stemming from mortgage loans and mortgage- backed securities the failed investment bank sold to the government-backed mortgage finance agency in the years before the financial crisis.
Under the deal, Fannie Mae would receive a general unsecured claim of $2.15 billion against its holding company's estate. Under Lehman's Chapter 11 payment plan, Fannie would recover about 25 cents on the dollar, or about $537.5 million.
For Fannie, the settlement allows the agency to put its long-running legal fight with Lehman to rest. In return, Lehman resolves its long-running dispute with Fannie, which had argued Lehman was on the hook for the dodgy loans, and will allow the estate to dole out an additional $400 million as part of its fifth distribution to creditors later this year.
Lehman's New York-based holding company has already paid creditors nearly $50 billion since officially exiting from bankruptcy protection in March 2012. That figure is expected to grow to more than $80 billion, Lehman said last summer.
The hearing will also be the last for Judge Peck, who is retiring at the end of the month. Judge Peck has overseen the biggest Chapter 11 case in history since Lehman's collapse on Sept. 15, 2008. Lehman officially exited Chapter 11 in 2012, but a reorganized company, overseen by a new board of directors, still is winding down Lehman's remaining holdings. The post-bankruptcy era is expected to continue for several more years as the team liquidates the Lehman estate's assets.
Judge Shelley Chapman is replacing Judge Peck in the Lehman case.
Also on Friday in Manhattan bankruptcy court, Dish Network Corp. (DISH) Chairman Charlie Ergen will again take on a group of hedge funds that hold LightSquared's bank debt.
This time, the two sides will be fighting over who should provide a short-term bankruptcy loan for the cash-strapped wireless satellite company. Mr. Ergen's SPSO Special Opportunities investment vehicle said the interest rate on its $33 million loan is lower than that of the hedge funds and has fewer restrictions. It also said it will allow all holders of LightSquared's bank debt to participate in the loan, not just the hedge funds.
After months of being on the same side in LightSquared's bankruptcy case, Mr. Ergen and the ad-hoc group of hedge funds have been adversaries since Dish withdrew its $2.2 billion bid for LightSquared's spectrum assets earlier this month. The hedge funds, who like Mr. Ergen own LightSquared's bank debt, had filed a restructuring proposal for LightSquared based on the bid and tried to force Dish into making the deal. However, a judge turned them down earlier this week, saying Dish properly abandoned its offer.
The winning loan is expected to keep LightSquared afloat through April. By then, the company hopes to have its $4 billion restructuring proposal approved. That plan, led by Fortress Investment Group, includes a $285 million bankruptcy loan from Melody Capital Advisors LLC that would keep it running until it leaves Chapter 11.
Excel Maritime Carriers Ltd. on Monday will ask the White Plains, N.Y., bankruptcy court to let it exit Chapter 11 protection.
The court will hold a hearing to consider confirming Excel's restructuring plan, which the company overhauled last fall to secure broad creditor support.
Under the plan, senior lenders, who are owed $765 million, would trade their debt for 83.3% of the new stock in the reorganized Excel as well as a new $300 million secured loan.
Bondholders and other unsecured creditors would share in 8% of Excel's new shares under the plan, and they would also get a chance to purchase another 3% of its shares for $10 million.
Those lower-ranking creditors were among those who had attacked Excel's original plan on the grounds that it would have allowed the family of Excel Chairman Gabriel Panayotides to hold on to control of the company after bankruptcy, while many creditors went largely unpaid.
The dispute threatened to block the company's exit from bankruptcy, but mediation led to the revamped plan, which now carries the support of many key creditors.
Excel, whose vessels transport dry-bulk cargo such as coal and grain around the world, sought Chapter 11 protection last July. -Joe Checkler, Jacqueline Palank and Peg Brickley contributed to this article.
Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires 01-24-14 1346ET Copyright (c) 2014 Dow Jones & Company, Inc.
