Investigation
Disney wants court examiner to probe Lehman Brothers transfers
The Walt Disney Co. asked a judge to appoint an examiner to investigate Lehman Brothers Holdings Inc.'s movement of funds between itself and subsidiaries around the time it filed for bankruptcy last month.
Disney, a creditor of Lehman and its Lehman Brothers Commercial Corp. unit, or LBCC, wants U.S. Bankruptcy Judge James Peck to appoint an examiner to review intercompany accounts and claims, as well as the actions of Lehman's officers and directors. Disney said it's owed about $92 million.
While the creditors committee can probe the Lehman transactions, it isn't required to share the information, according to Disney's court filing. Harbinger Capital Partners Special Situation Fund L.P. and other creditors who are seeking court approval to investigate Lehman themselves similarly wouldn't be obligated to disclose what they find. Appointing an examiner whose findings would be made public is a good solution, Disney said in its request.
“When creditors lose money, they deserve to know why and how,” according to papers filed yesterday in U.S. Bankruptcy Court in Manhattan by Disney's attorney, Martin Bienenstock. Lehman's conduct related to its subsidiaries “is of paramount concern, to not only TWDC, but other creditors.”
Lehman bankruptcy lawyer Harvey Miller didn't immediately return a phone call seeking comment. Miller said Oct. 16 that the collapsed New York-based investment bank is the subject of three federal criminal probes.
Disney also wants the examiner to review: priority claims Lehman incurred to LBCC and other subsidiaries; “acts and omissions” of Lehman and LBCC's officers and directors before and after the filing; and actions Lehman and LBCC took to protect their business and creditors related to the sale of Lehman's brokerage business to Barclay's Capital, the investment bank unit of Barclay's PLC.
Bankruptcy law requires naming an examiner in any case where the appointment is in the interest of creditors and the bankrupt company's unsecured debts are more than $5 million. Lehman last month filed the largest bankruptcy in history with $613 billion in debt.
A hearing on the request is scheduled for Nov. 5.
(Published by Jurist- Bloomberg 21, 2008)