8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

September 22, 2010

LEHMAN BROTHERS HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	1-9466	13-3216325
(State or other jurisdiction Of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1271 Avenue of the Americas

New York, New York

10020

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code:

(646) 285-9000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01 Other Events.

On September 22, 2010, representatives of Lehman Brothers Holdings Inc. (the “Registrant”) participated in a hearing at the United States Bankruptcy Court (the “Court”) where they presented to the Court an updated status report of the Registrant’s bankruptcy proceedings. A presentation, attached hereto as Exhibit 99.1, was provided at the hearing as background information.

ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Lehman Brothers Holdings Inc. – The State of the Estate, dated September 22, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LEHMAN BROTHERS HOLDINGS INC.
Date: September 22, 2010	By:	/s/ William J. Fox
	Name:	William J. Fox
	Title:	Chief Financial Officer and Executive Vice President

EXHIBIT INDEX

Exhibit No.	Description
99.1	Lehman Brothers Holdings Inc. – The State of the Estate, dated September 22, 2010.

EX-99.1

©

Copyright 2010. Alvarez & Marsal

Holdings, LLC. All Rights Reserved.

L E A D E R S H I P 

P R O B L E M  SO L V I N G 

V A L U E  C R E A T I O N

Lehman Brothers Holdings Inc.

The State of the Estate

September 22, 2010

Exhibit 99.1

1

The information and data included in this report are derived from sources available to Lehman Brothers

Holdings Inc. and its subsidiaries that have filed proceedings under chapter 11 of the Bankruptcy Code

(collectively, the "Debtors").  The Debtors have prepared this presentation based on the information

available to them at this time, but note that such information is incomplete and may be materially

deficient in certain respects.  This report was prepared by the Debtors for purposes of presenting the

Court with a status of their respective estates as of the date of the presentation and is not meant to be

relied

upon

by

investors

or

others

as

a

complete

description

of

the

Debtors’

estates,

businesses,

condition (financial or otherwise), results of operations, prospects, assets or liabilities.  The information

in this presentation will only be updated, including any corrections, in connection with future

presentations to the Court on the state of the Debtors' estate. Certain prior period balances in this

presentation may have changed from amounts previously presented,

which may be a result of certain

reclassifications made, refer to the footnotes herein accordingly. The Debtors reserve all rights to revise

this report.  All amounts are unaudited and subject to revision.

This

report

is

intended

to

be

read

in

conjunction

with

annotated

explanations

and

footnotes

which

have

been

included

in

the

version

of

this

report

filed

with

the

Court

and

included

in

the

filing

on

Form

8-K

with

the Securities and Exchange Commission (“SEC”). The annotated version of this report is also

available

on

the

website

that

hosts

information

about

the

Debtors

at

www.lehman-docket.com.

This report should also be read in conjunction with Monthly Operating Reports (“MORs”) and other

reports

filed

with

the

SEC

and

the

Court.

These

reports

can

also

be

located

at

www.lehman-

docket.com.

September 22, 2010

Lehman Brothers Holdings Inc. –

The State of the Estate

2

Contents

I.

Executive Summary

II.

Asset Recovery Update

A.

Cash Position

B.

Cash Flow (Filing to Date)

C.

Highlights by Asset Category

1.)  Loans

2.)  Derivatives

3.)  Private Equity / Principal Investments

4.)  Real Estate

5.)  Other Assets

6.)  Litigation Activities

D.

Future Recovery Estimates

1.)  By Asset Category

2.)  By Legal Entity

III.

Consolidated Headcount Plan

IV.

Claims Resolution Update

3

Contents (continued)

V.

Plan Status Report

A.

Progress to Date

B.

Considerations

C.

Economic Compromise Plan

D.

Priorities

E.

Timetable and Objectives

4

I.

Executive Summary

Overall

•

Highly complex case that has advanced significantly since the last State of the Estate (11/18/09)

•

Market liquidity continues to improve resulting in more buyers or refinancing sources

•

Aggressive recovery management strategy continues to enhance ultimate recovery values

•

11/09 final Bar date resulted in almost $1.2 Trillion of claims filed

•

Significant progress has been made in processing and reducing filed claims over the past six

months

•

A proposed joint chapter 11 plan (the “Plan”) was filed in March 2010, followed by a proposed

Disclosure Statement in April 2010 (“April 2010 Forecast”)

•

Creditor

differences

are

narrowing

and

revised

Plan

/

Disclosure

Statement

is

likely

for

Q4

2010

5

I.

Executive Summary (continued)

Asset

Recovery

Update

•

Every asset team has revised projected recoveries to higher levels since the last report

•

Continue to see stabilizing and improving markets that are increasing the value of assets under

administration

•

Employing a reasonable and orderly liquidation strategy, as supported by UCC, emphasizing VALUE

CREATION

versus

IMMEDIATE

CASH

GENERATION

•

Worked with the FDIC to restructure Lehman’s bank platforms for optimum liquidation and sale results

•

Exited 85% or $26 Billion of unfunded revolver liability, and $3.3 Billion of PE/PI unfunded capital

commitments, at minimal cost

•

Where appropriate, pursuing avoidance actions and other litigation to achieve recoveries that will

enhance

the

value

of

the

Debtors’

estates

•

Generally, experiencing good cooperation from foreign administrators that may result  in improved

recoveries from foreign assets, and support for a revised Plan

•

JPMorgan Collateral Disposition Agreement (“CDA”) effective March 2010, has facilitated administration

and potential enhancement of value of assets

6

I.

Executive Summary (continued)

Claims Management

•

Claims filed against LBHI in the amount of $860 Billion by the final Bar date plus claims filed

against the subsidiaries of LBHI in the amount of $302 Billion, resulting in total filed claims of

almost

$1.2

Trillion

plus

numerous

unliquidated

claims

•

Clearly erroneous errors and duplicate claims have been disallowed and a more realistic range

of LBHI unsecured claims is estimated at $250-$350 Billion

•

Although additional analysis remains to be done, an estimate of projected allowed claims is now

in process

•

A Plan approval process may not require final resolution of these claims

•

The

key

priority

during

the

last

six

months

has

been

to

focus

on

the

foreign

affiliate

and

foreign

third

party

guarantee

claims

and

related

intercompany

claims

–

substantial

progress

has

been

made in this area

7

I.

Executive Summary (continued)

8

I.

Executive Summary (continued)

Plan Progress

•

Size, complexity and diverse interests and parties made the original timing target for confirmation

of the Plan unachievable

•

Major efforts expended to educate foreign administrators (80+ proceedings, 11+ Official

Representatives, multiple jurisdictions) as to relevant issues and, in turn, have them

communicate such issues to their constituencies and, also, submit a meaningful response to the

Debtors from the foreign administrators

•

At this time, the Debtors continue to believe this approach of persistent and diligent negotiations

is superior to the alternative of expensive and extended litigation

•

If this approach is unsuccessful the Debtors will not hesitate to pursue other alternatives and if

necessary to initiate appropriate litigation

•

Despite the delay, the Debtors remain optimistic of having confirmation of the Plan by end of Q1

2011

9

II.

Asset Recovery Update

A.

Cash Position

B.

Cash Flow (Filing to Date)

C.

Highlights by Asset Category

D.

Future Recovery Estimates

A.

Cash

and

Cash

Investment

Position

at

6/30/10

(a) 

10

II.

Asset Recovery Update

($ in Millions, foreign currencies reflected in USD equivalents)

General

Segregated

Total

Funds

Funds (b)

Funds

Legal Entities

LB Holdings Inc. (LBHI)

1,605

$     

470

$        

2,075

$     

(c)

LB Special Financing Inc. (LBSF)

6,745

610

7,355

(d)

Lehman Commercial Paper Inc. (LCPI)

1,037

2,290

3,327

LB Commodity Services Inc. (LBCS)

1,490

41

1,531

LB Financial Products (LBFP)

424

-

424

(d)

LB Commercial Corporation (LBCC)

461

5

466

(d)

LB Derivative Products (LBDP)

387

-

387

LB OTC Derivatives (LOTC)

239

-

239

Other Debtor Entities

9

2

11

Non-Debtor Entities

3,035

72

3,107

Total Cash and Cash Investments

15,432

3,490

18,922

(e)

Cash Collateral -

Posted Pre-Petition

-

2,209

2,209

(f) (g)

Total Cash, Cash Investments, and Cash Collateral

15,432

$   

5,699

$     

21,131

$   

Notes:

(a)

This report includes cash and cash investments managed and reconciled by Lehman's North America, Europe, Asia and South America operations.  This report

excludes the following:

-

Cash related to LBI, LBIE and other entities under separate administration; and

-

Cash held by Aurora Bank, Woodlands Commercial Bank, Lehman Brothers Trust Company N.A., and Lehman Brothers Trust Company of Delaware;

(b)

Segregated funds primarily include cash segregated per court order, stipulation, or debtors' estimate of funds collected on behalf of secured parties, and cash

received from third parties that is pending investigation and may not belong to the Estate.

(c)

Excludes $87 Million of a court approved advance receivable facility with Aurora Bank.

(d)

Excludes cash posted as collateral for derivative hedging activity, prior to the recognition of any gains or losses, of $552 Million at LBSF, $25 million at LBCC, $20 Million at LBFP, and $1

million at LBCS.

(e)

Total

cash

and

cash

investments

at

June

30,

2010

include

cash

of

$1.0

Billion

and

cash

investments

of

$17.9

Billion.

Cash

investments

include

interest-bearing

deposits

with

banks,

money

market

funds,

U.S.

government

obligations

and

U.S.

government

guaranteed

securities.

This

balance

is

based

on

preliminary

closing

numbers

and

is

subject

to

adjustment.

(f)

Includes $2.2 Billion still held as collateral by Citibank and HSBC that is subject to bank claims primarily for clearing and derivative exposure.

(g)

Excludes $9.3 Billion believed to be wrongfully taken by JPMorgan ("JPM"), Bank of America ("BOA"), and HSBC.

(d)

B.

Cash Flow: Filing Date to 6/30/10

11

II.

Asset Recovery Update (continued)

($ in Millions, foreign currencies reflected in USD equivalents)

Sources of Cash

Comments

Derivatives

11,467

$

Primarily settlements from counterparties

Loans

3,929

Primarily principal and interest from corporate borrowers

Real Estate

2,165

Primarily principal and interest on real estate loans

PE / PI

1,792

Primarily redemptions, distributions and/or proceeds from the sale of investments

Other Regions

1,687

Transfers from Lehman entities in Asia and South America

Major Assets

2,824

Includes sale of office buildings $1.3BN, Neuberger Berman $685MM, R3 Capital $254MM, Eagle Energy $230MM, and Aviation assets $166MM

Minor Other Assets

2,121

Primarily dividend distributions, intercompany loan repayments, return of cash collateral, and other collections in legacy bank accts

Total Sources of Cash

25,984

Uses of Cash

Reinvestment in Legacy Assets

(3,813)

Primarily collateral posted for derivative hedging, purchase of open loan trades, preservation of real estate assets, and PEPI capital call funding

Operating Expenses / Professional Fees

(1,562)

Compensation $550MM (including A&M), professional fees $527MM, Transaction Services Agreement $121MM, rent $91MM and other of $273MM

Bankhaus Settlement

(1,280)

Purchase of loans per court-approved settlement

Capital Contributions to Subsidiaries

(380)

Woodlands Bank $200MM and Aurora Bank $180MM

Other Disbursements / FX Fluctuation

(904)

Total Uses of Cash

(7,938)

Net Cash Flow

18,045

$

Beginning Cash (9/15/08)

2,409

$  

Beginning cash balance has been adjusted from the 11/18/09 State of Estate presentation to reflect cash collateral seized by BOA and JPM,

adjustments for pre-petition overdraft balances, and inclusion of legacy Europe account balances

Net Cash Flow

18,045

Financial Institution Set-Off and Other

(1,532)

Ending Cash (6/30/10)

18,922

Cash Collateral - Posted Pre-Petition

2,209

Includes $2.2BN still held as collateral by Citibank and HSBC that is subject to bank claims primarily for clearing and derivative exposure

Ending Cash and Cash Collateral (6/30/10)

21,131

$

Excludes $9.3BN believed to be wrongfully taken by JPMorgan ("JPM"), Bank of America ("BOA"), and HSBC

12

C.

Highlights by Asset Category

1.)

Loans

•

Market dynamics have improved

•

Refinancings

are

happening

ahead

of

schedule

•

Overall recoveries are being accelerated

•

85% of unfunded revolver commitments, or $26 Billion, have been eliminated at minimal cost

•

Gross recovery proceed estimates remain unchanged from April 2010 Forecast, but proceeds are being

realized earlier

•

Strategy to rely on an improving liquidity picture has been successful

II.

Asset Recovery Update (continued)

13

C.

Highlights by Asset Category

2.)

Derivatives

•

Estimate of gross recovery proceeds has been increased by $850 Million from April 2010 Forecast

•

Expect to collect $15 Billion from derivatives receivables from all operations under LAMCO supervision

•

Approximately $11 Billion has been collected through 6/30/10

•

LAMCO is using hedging to lock up certain contract values and has posted $400 Million as collateral

•

Big Bank claim resolution remains a major challenge in 2011 as collections focus is winding down

•

The Derivative team results have surpassed all expectations and should continue to outperform

original targets

II.

Asset Recovery Update (continued)

C.

Highlights by Asset Category

3.)

Private

Equity

/

Principal

Investments

•

$681 Million collected in 1H 2010 and $950 Million in forecasted collections for full year 2010

•

Market conditions for disposition of assets are improving and pricing is better

•

Cash

realization

continues

to

be

accelerated

from

the

April

2010

Forecast

•

Value of the remaining portfolio has increased about 2% since April 2010 Forecast

•

The LAMCO – PE/PI team has a strong understanding of such assets and the determination of best

14

II.

Asset Recovery Update (continued)

exit point for converting to cash

15

C.

Highlights by Asset Category

4.)

Real Estate

•

Market conditions continue to improve with better pricing and accelerated recovery versus the April

2010 Forecast

•

Gross recovery proceeds have increased by $100 Million+ from April 2010 Forecast

•

Significant unrecognized upside value exists in certain of the assets if market conditions continue to

improve

•

The LAMCO -

Real Estate team has been doing a terrific job on aggressive asset management of

its portfolio

•

Value maximization approach was actively supported by the UCC

•

Cooperation and joint efforts of the Debtors and UCC are resulting in enhanced recoveries by the

Debtors

II.

Asset Recovery Update (continued)

16

II.

Asset Recovery Update (continued)

17

II.

Asset Recovery Update (continued)

18

D.

Future

Recovery

Estimates

1.)

By Asset Category

II.

Asset Recovery Update (continued)

($ in Billions)

Actual

Net Cash

Recovery

Latest Thinking

Plan

& Other

Amount

Forecast (Preliminary)

4/14/10 (a)

Adjustments (b)

Adjustment

6/30/10 (c)

Cash

15.6

$          

5.5

$            

-

$              

21.1

$             

Real Estate

12.1

(0.8)

0.1

11.4

Loans

7.2

(2.0)

-

5.2

PE/PI

12.1

(0.9)

0.2

11.4

Derivatives

5.6

(1.8)

0.9

4.7

Banks

1.5

-

-

1.5

Foreign Receivables (LBHI)

3.0

-

1.0

4.0

Litigation

-

-

-

-

Gross Proceeds

57.1

-

2.2

59.3

Reinvestment (d)

(1.8)

-

-

(1.8)

Net Proceeds (e)

55.3

$          

-

$              

2.2

$            

57.5

$             

Notes:

(a) See exhibit 7 to Disclosure Statement dated April 14, 2010 for further details.

(b) Other Adjustments include reclassifications to be comparable with the current basis of presentation.

(c) Latest Thinking Forecast amounts are preliminary and subject to change.

(d) Related to the preservation and recovery enhancement of the Estate's assets.

(e) Before operating expenses, litigation costs and professional fees to be paid in the future.

19

D.

Future

Recovery

Estimates

2.)

By Legal Entity

II.

Asset Recovery Update (continued)

($ in Billions)

Estimated

Total

Future

Preliminary Recovery

Cash (a)

Proceeds

Proceeds (b)

LBHI

6.3

$           

9.9

$           

16.2

$            

LBSF

7.4

3.3

10.7

LCPI

1.1

8.2

9.3

LBCS

1.5

0.3

1.8

LBCC

0.5

0.2

0.7

Other Debtors

1.1

0.7

1.8

Non-Debtors

3.2

11.6

14.8

Foreign Receivables (LBHI)

-

4.0

4.0

Gross Proceeds

21.1

$         

38.2

$         

59.3

$            

Reinvestment (c)

(1.8)

Net Proceeds (d)

57.5

$            

Notes:

(a) After operating expenses, litigation costs and professional fees paid through 6/30/10.

(b) Amounts are preliminary and subject to change. Does not include recoveries from intercompanies with Debtor controlled entities.

(c) Related to the preservation and recovery enhancement of the Estate's assets.

(d) Before operating expenses, litigation costs and professional fees to be paid in the future.

As of June 30, 2010

III.

Consolidated Headcount Plan

Consolidated Headcount Plan

20

21

III.

Consolidated Headcount Plan

Lehman

A&M

Lehman

A&M

Lehman

A&M

Lehman

A&M

LAMCO (a)

331

85

379

69

339

27

(11)%

(60)%

Administration (b)

117

48

136

62

136

31

0%

(50)%

Litigation (c)

21

27

19

18

25

8

32%

(56)%

Total Headcount

469

159

534

149

500

66

(6)%

(55)%

Notes:

(a)

(b)

(c)

Litigation includes Litigation attorneys and Data Mining / Forensics teams.

Administration includes Corporate Counsel, Corporate Tax, Finance, Treasury, Human Resources, Corporate Services, Vendor Management, Claims Management and

Executive Assistants.

% Change

4/01/09 (actual)

4/01/10 (actual)

4/01/11 (projected)

4/01/10 to 4/01/11

LAMCO employees were LBHI employees prior to May 2010.  LAMCO includes Derivatives, Loans, Real Estate, Private Equity / Principal Investments, Technology and Risk

Management.

22

IV.

Claims Resolution Update

Claims Resolution Update

23

IV.

Claims Resolution Update

Notes:

(a) See exhibit 6 to Disclosure Statement dated April 14, 2010 for definitions and details.

(b) Subject to final agreement and documentation.

(c) Currently $998 Billion of active claims, which excludes expunged or withdrawn claims.

($ in Billions)

April 14, 2010 (a)

Current

ADJUSTED

Likely

ADJUSTED

Likely

Claims

Outstanding

Allowed

Outstanding

Allowed

LBHI:

As Filed

Claims

Claims

(b)

Claims

Claims

(b)

Direct Claims

$210

$183

$102

$112

$112

Intercompany Claims

80

56

43

59

43

Third-Party Guarantee Claims:

Domestic

48

21

46

22

International

95

73

72

66

Total Third-Party Guarantee Claims

255

143

94

118

88

Affiliate Guarantee Claims:

Domestic

23

8

International

201

66

Total Affiliate Guarantee Claims

315

224

21

74

21

Total Claims Against LBHI

860

605

260

363

264

Total Claims Against All Other Debtors

302

135

135

101

101

Total Claims -

LBHI and All Other Debtors

$1,162

(c)

$740

$395

$464

$365

24

IV.

Claims Resolution Update (continued)

SUMMARY HIGHLIGHTS

•

Although not adjudicated, substantial progress has been made in narrowing gross amount of

claims from nearly $1.2 Trillion to $464 Billion

•

Affiliate

Guarantee

Adjusted

Outstanding

Claims

are

projected

to

decrease

by

$150

Billion,

reflecting efforts made with foreign administrators to address merits of filed claims

•

Third-Party Guarantee Adjusted Outstanding Claims are projected to decrease by $25 Billion,

reflecting analysis of additional information provided by international affiliates

•

Estimate

for

Direct

Claims

reflects

an

additional

reserve

of

$10

Billion

for

contingent

and

unliquidated

claims

•

$43 Billion of Intercompany Claims relating to LBT are subject to bilateral discussions with the

stakeholders

25

V.

Plan Status Report

A.

Progress to Date

B.

Considerations

C.

Economic Compromise Plan

D.

Priorities

E.

Timetable and Objectives

26

V.

Plan Status Report

A.

Progress

to

Date

September

22,

2009

–

Bar

Date

for

Filing

Proofs

of

Claim

(a)(b)

March

15,

2010

–

Filed

Proposed

Joint

Chapter

11

Plan

as

basis

for

discussion

with

parties

in

interest

April

14,

2010

–

Filed

Proposed

Disclosure

Statement

and

Proposed

Amended

Joint

Chapter

11

Plan

Since April 14, 2010 the Debtors have met with numerous constituencies (and their respective legal

and financial advisors), including, amongst others:

-UCC

-

Foreign Protocol Administrators as a group

-LBHI Ad-Hoc

-

Foreign Administrators on an individual basis

-LBSF Ad-Hocs

-

LBIE

-

LBT Ad-Hocs

-

LBI

-Numerous other individual creditors and their representatives

Notes:

(a)  October 22, 2009 for Derivative Guarantee Questionnaires.  November 2, 2009 for Lehman Program Securities.

(b)  IRS Bar Date of December 31, 2010.

27

V.

Plan Status Report (continued)

B.

Subject

Presented

By

Parties

In

Interest

And

Debtors

For

Consideration

(a)

Substantive

Consolidation

(b)

Non-Substantive

Consolidation

(b)

•

Operated as one company, by business unit, not by

legal entity/some subsidiaries had no employees or

place of business

•

Separate subsidiary financial statements, but mostly

used internally for financial accounting and tax

purposes

•

Centralized cash management/and reliance based on

separate credit

analysis is not apparent

•

Certain LBHI subsidiary creditors assert reliance on

double dip claim against subsidiary and LBHI

•

LBHI Executive Committee responsible for firm-wide

strategy, risk, funding, liquidity, operations and

products

•

Asserted sovereign rights of foreign jurisdictions

•

Global supervisory regulations

(CSE program

(c)

) were

in place

•

Certain Lehman entities were regulated by applicable

laws and rules

Notes:

(a)

Not intended to be comprehensive or limiting in any way. Presented to highlight certain of the issues raised by various

parties and under discussion and study.

(b)

See Section X, A. in Disclosure Statement for a more complete summary.

(c)

Consolidated Supervised Entity program (“CSE program”) under the SEC.

28

V.

Plan Status Report (continued)

C.

Economic

Compromise

Plan

Subsidiary Debtors currently are administered as separate entities for financial reporting and

accounting purposes

Economic compromise is proposed and embedded in the Plan:

•

Third-party guarantee claims are limited to estimated third-party liabilities of subsidiaries at the

time of filing

•

Affiliate guarantee claims are limited to maximum allowance of $21.2 Billion

•

At the core of the Plan construct is the proposal that third party creditors of LBHI subsidiaries

should be limited to the benefit of one guarantee claim against LBHI

•

LBT claim against LBHI is proposed to be compromised to avoid litigation as to the purpose of LBT

•

As of this date, the foregoing is subject to ongoing negotiations

It is the Debtors’

proposal that an economic compromise will reduce time (and costs) that would

otherwise be necessary to litigate a myriad of guarantee claims and other issues including

substantive consolidation

29

V.

Plan Status Report (continued)

30

V.

Plan Status Report (continued)