Lehman Sells Bank Units to Raise $1.5 Billion for Creditors
Lehman Brothers Holdings Inc. said on Friday that it has sold its Aurora Bank FSB subsidiary, a move that should help funnel some $1.5 billion into the pockets of Lehman's creditors, the Wall Street Journal reported on Saturday. Home mortgage servicer Nationstar Mortgage Holdings Inc. said on Friday that it acquired about $63.7 billion in residential mortgage servicing rights from Aurora, while New York Community Bank said that it assumed $2.3 billion of Aurora's customer deposits. Ocwen Financial Corp. said it previously purchased $1.8 billion worth of Aurora's commercial servicing-rights portfolio. Read more. (Subscription required.)
In related news, a hedge fund manager is demanding that the trustee unwinding the brokerage of Lehman Brothers Holdings Inc. use more than $3 billion in its reserves to quickly make payments to customer claimants, saying the trustee's "aspirational date" to pay those claims keeps slipping "further and further into the future," Dow Jones Daily Bankruptcy Review reported yesterday. In a court filing on Friday, New York-based Elliott Management said that the trustee unwinding the brokerage in accordance with the Securities Investor Protection Act, James W. Giddens, should make at least an initial distribution of the money in its reserves, even as it sorts out how much it owes to the Lehman parent and U.K. affiliate Lehman Brothers International Europe. According to Elliott's filings, the trustee should be forced to distribute $3.15 billion of $13.81 billion and still have more than $10 billion left in reserve.