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Lehman - Procedures for the Settlement or Assignment of Derivatives Contracts


14 November 2008

Lehman Brothers Holdings Inc. and its affiliated chapter 11 debtors file motion  

On November 13, 2008, Lehman Brothers Holdings Inc. and its affiliated chapter 11 debtors (the "Debtors") filed a motion (the "Motion") seeking to establish (i) procedures for the assumption and assignment of pre-petition derivative contracts that have not been terminated and (ii) settlement procedures to provide for the efficient resolution of issues relating to terminated derivative contracts.

The Debtors were parties to nearly one million derivative contracts, in the form of securities contracts, forward contracts, repurchase agreements, swap transactions and master netting agreements. As described more fully in the Motion, approximately 730,000 of the 930,000 have been terminated post-petition. By this Motion, the Debtors seek two forms of relief. First, the Debtors seek to establish procedures to assume and assign to third parties derivative contracts not yet terminated by non-debtor counterparties. Second, the Debtors seek to establish termination and settlement procedures to address those situations where a counterparty has terminated but the parties disagree about the amounts owed by or to either party.

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