Chase Amassing Lehman Claims

On Monday, JP Morgan Chase reported that it had purchased more than $60 million in claims from Raiffeisen Zentralbank Osterreich AG. In July Chase bought about $200 million in claims. And while Chase has sold some claims too -- back in May they sold a couple of big claims -- it appears that there are more and larger claims going to Chase, including some "partial" claim transfers, which should add a special something to the plan negotiations:  what debtor wouldn't like to find it has even more creditors post-petition?

And then there is the matter of how all these claims play into the ongoing litigation between Lehman and Chase . . . 

N.B.  Some of the August 30th transfers are docketed as transfers from Chase, but the underlying documents show that they are Chase purchases.

Comments

[mt]

Aren't there, like, a trillion dollars in claims? Isn't this just buying a drop or two in the bucket?

[Stephen Lubben]

You're absolutely right that $60 million in one day, in the context of this case, does not mean a lot -- but if Chase continues to buy $200 million or more per month, that is another story.

[sd]

What's your point and how do you suppose the buying of claims plays into the ongoing litigation?

[Stephen Lubben]

If the plan is funded even in part by proceeds from litigation against Chase, how does does vote on the plan?

[sd]

Chase was Lehman's primary bank prepeptition and it has filed over $29 billion in claims against Lehman. Of course the plan is going to be funded by litigation proceeds and it is as written, but I’m not sure what that has to do with voting for or against the plan. Chase may object to confirmation as the plan not being feasible, but that's not plan voting. Any plan must use litigation proceeds to pay creditors; that's not a reason to vote for or against a plan. Chase will vote against the plan if its prepetition claims (and the ones it purchased) are not being treated the way they want them to be, not because post-petition litigation proceeds are being used to fund a plan. I think the more interesting questions is what happens when Lehman tries to designate Chase’s claims if a settlement is not reached.

I appreciate the response though. For a second there, I thought you just deleted my comments.