The trustee liquidating Lehman Brothers Holdings Inc's brokerage unit has agreed with Pacific Investment Management Co unit to resolve $187.4 million of the money management firm's customer claims, likely at a fraction of their estimated value.
According to papers filed on Wednesday with the U.S.bankruptcy court in Manhattan, Pimco will no longer be able to pursue customer claims, and will instead receive $146.6 million of general unsecured creditor claims against the brokerage, Lehman Brothers Inc.
The brokerage's estate would pay up to $20 million of cash on the claims, and $25.6 million of disputed collateral would be returned to Pimco clients. Another $4.9 million of collateral would be returned to the brokerage's estate.
James Giddens, the Lehman brokerage trustee, said the accord would resolve the "vast majority" of remaining disputed customer claims in the Pimco case.
The settlement requires court approval at a hearing set for Jan. 22. The Wall Street Journal reported on the accord earlier on Friday.
Giddens has already repaid roughly $105 billion to 111,000 former Lehman customers, who have been paid in full, and other creditors whose claims had higher priority.
Unsecured creditors started receiving payments in September, six years after Lehman, which had been Wall Street's fourth-largest investment bank, filed for Chapter 11. Thebankruptcy remains by far the largest in U.S. history.
Pimco is a unit of German insurer Allianz SE. It oversaw $1.87 trillion of assets as of Sept. 30, 2014, but has suffered large redemptions since co-founder Bill Gross resigned suddenly on Sept. 26 to join Janus Capital Group Inc.
The case is In re: Lehman Brothers Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-01420.
