Monthly Operating Report filed with the Bankruptcy Court on February 22, 2011

EX-99.1 2 dex991.htm MONTHLY OPERATING REPORT FILED WITH THE BANKRUPTCY COURT ON FEBRUARY 22, 2011 Monthly Operating Report filed with the Bankruptcy Court on February 22, 2011

Exhibit 99.1

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK


In re:				Chapter 11 Case No.

Lehman Brothers Holdings Inc., et al.,				08-13555

Debtors.

MONTHLY OPERATING REPORT

JANUARY 2011

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

SCHEDULE OF PROFESSIONAL FEE AND EXPENSE DISBURSEMENTS


DEBTORS’ ADDRESS:		LEHMAN BROTHERS HOLDINGS INC.
		c/o WILLIAM J. FOX
		1271 AVENUE OF THE AMERICAS
		35^th FLOOR
		NEW YORK, NY 10020

DEBTORS’ ATTORNEYS:		WEIL, GOTSHAL & MANGES LLP
		c/o SHAI WAISMAN
		767 FIFTH AVENUE
		NEW YORK, NY 10153

REPORT PREPARER:		LEHMAN BROTHERS HOLDINGS INC., A DEBTOR IN POSSESSION (IN THE SOUTHERN DISTRICT OF NEW YORK)

THIS OPERATING STATEMENT MUST BE SIGNED BY A REPRESENTATIVE OF THE DEBTOR

The undersigned, having reviewed the attached report and being familiar with the Debtors’ financial affairs, verifies under penalty of perjury, that the information contained therein is complete, accurate and truthful to the best of my knowledge.


		Lehman Brothers Holdings Inc.

Date: February 22, 2011	By:	/s/ William J. Fox
		William J. Fox
		Executive Vice President

Indicate if this is an amended statement by checking here: AMENDED STATEMENT ¨

TABLE OF CONTENTS


Schedule of Debtors			3

Lehman Brothers Holdings Inc. (“LBHI”) and Other Debtors and Other Controlled Subsidiaries
Basis of Presentation — Schedule of Cash Receipts and Disbursements			4
Schedule of Cash Receipts and Disbursements			5

LBHI
Basis of Presentation — Schedule of Professional Fee and Expense Disbursements			8
Schedule of Professional Fee and Expense Disbursements			9

SCHEDULE OF DEBTORS

The following entities have filed for bankruptcy in the Southern District of New York:


	Case No.		Date Filed
Lead Debtor:
Lehman Brothers Holdings Inc. (“LBHI”)		08-13555		9/15/2008

Related Debtors:
LB 745 LLC		08-13600		9/16/2008
PAMI Statler Arms LLC(1)		08-13664		9/23/2008
Lehman Brothers Commodity Services Inc. (“LBCS”)		08-13885		10/3/2008
Lehman Brothers Special Financing Inc. (“LBSF”)		08-13888		10/3/2008
Lehman Brothers OTC Derivatives Inc. (“LOTC”)		08-13893		10/3/2008
Lehman Brothers Derivative Products Inc. (“LBDP”)		08-13899		10/5/2008
Lehman Commercial Paper Inc. (“LCPI”)		08-13900		10/5/2008
Lehman Brothers Commercial Corporation (“LBCC”)		08-13901		10/5/2008
Lehman Brothers Financial Products Inc. (“LBFP”)		08-13902		10/5/2008
Lehman Scottish Finance L.P.		08-13904		10/5/2008
CES Aviation LLC		08-13905		10/5/2008
CES Aviation V LLC		08-13906		10/5/2008
CES Aviation IX LLC		08-13907		10/5/2008
East Dover Limited		08-13908		10/5/2008
Luxembourg Residential Properties Loan Finance S.a.r.l		09-10108		1/7/2009
BNC Mortgage LLC		09-10137		1/9/2009
LB Rose Ranch LLC		09-10560		2/9/2009
Structured Asset Securities Corporation		09-10558		2/9/2009
LB 2080 Kalakaua Owners LLC		09-12516		4/23/2009
Merit LLC		09-17331		12/14/2009
LB Somerset LLC		09-17503		12/22/2009
LB Preferred Somerset LLC		09-17505		12/22/2009

(1)

On May 26, 2009, a motion was filed on behalf of Lehman Brothers Holdings Inc. seeking entry of an order pursuant to Section 1112(b) of the Bankruptcy Code to dismiss the Chapter 11 Case of PAMI Statler Arms LLC, with a hearing to be held on June 24, 2009. On June 19, 2009, the motion was adjourned without a date for a continuation hearing.

The Chapter 11 case of Lehman Brothers Finance SA (Case No: 08-13887) has been dismissed.

LEHMAN BROTHERS HOLDINGS INC. (“LBHI”) AND OTHER DEBTORS AND OTHER

CONTROLLED ENTITIES

BASIS OF PRESENTATION

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

JANUARY 1, 2011 TO JANUARY 31, 2011

The information and data included in this Monthly Operating Report (“MOR”) are derived from sources available to Lehman Brothers Holdings Inc. (“LBHI”) and its Controlled Entities (collectively, the “Company”). The term “Controlled Entities” refers to those entities that are directly or indirectly controlled by LBHI, including LAMCO LLC (“LAMCO”), and excludes, among other things, those entities that are under separate administrations in the United States or abroad, including Lehman Brothers Inc., which is the subject of proceedings under the Securities Investor Protection Act. LBHI and certain of its Controlled Entities have filed for protection under Chapter 11 of the Bankruptcy Code, and those entities are referred to herein as the “Debtors”. The Debtors’ Chapter 11 cases have been consolidated for procedural purposes only and are being jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure. The Debtors have prepared this MOR, as required by the Office of the United States Trustee, based on the information available to the Debtors at this time, but note that such information may be incomplete and may be materially deficient in certain respects. This MOR is not meant to be relied upon as a complete description of the Debtors, their business, condition (financial or otherwise), results of operations, prospects, assets or liabilities. The Debtors reserve all rights to revise this report.

This MOR is not prepared in accordance with U.S. generally accepted accounting principles (GAAP). This MOR should be read in conjunction with the financial statements and accompanying notes in the Company’s reports that were filed with the United States Securities and Exchange Commission.

This MOR is not audited and will not be subject to audit or review by the Company’s external auditors at any time in the future.

The beginning and ending balances include cash in demand-deposit accounts (DDA), money-market funds (MMF), treasury bills, and other investments.

Beginning and ending cash balances are based on preliminary closing numbers and are subject to adjustment.

Beginning and ending cash and investment balances exclude the following:

•

Cash posted as collateral for hedging activity;

•

Cash related to LBHI’s wholly-owned indirect subsidiaries Aurora Bank FSB (formerly known as Lehman Brothers Bank FSB), Woodlands Commercial Bank (formerly known as Lehman Brothers Commercial Bank), LBTC Transfer Inc. (formerly known as Lehman Brothers Trust Company N.A.) and Lehman Brothers Trust Company of Delaware;

•

Cash pledged on or prior to September 15, 2008 by the Company in connection with certain documents executed by the Company and Citigroup Inc. and HSBC Bank PLC, currently recorded at $2 billion and $222 million; and

•

$500 million which was seized by Bank of America (“BOA”) to offset derivatives claims against the Debtors. On November 16, 2010, the Bankruptcy Court ruled that BOA had no right to set-off these funds and must return the $500 million plus an estimated $95 million in interest to the Company.

Intercompany transfers between Lehman entities are listed as disbursements for the paying entity and receipts for the receiving entity.

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Cash Receipts and Disbursements (a)

January 1, 2011 - January 31, 2011

Unaudited ($ in millions, foreign currencies reflected in USD equivalents)


																														Total Debtors and Other Controlled Entities
			Debtor Entities															Other Controlled Entities (b)
			LBHI			LBSF			LCPI			Other			Total			LAMCO		LB1 Grp		PAMI		Other			Total
Beginning Total Cash and Investments (1/1/11)	(c	)	$	2,318		$	8,579		$	4,347		$	3,236		$	18,481		$	104	$	1,020	$	7	$	2,477		$	3,609		$	22,090
Restricted Cash	(d	)		(1,338	)		(657	)		(1,779	)		(51	)		(3,826	)		—		—		—		(82	)		(82	)		(3,907	)

Beginning Free Cash and Investments				980			7,922			2,568			3,185			14,655			104		1,020		7		2,395			3,525			18,181

Sources of Cash

Derivatives
Collections from Live / Terminated Trades				—			144			—			56			200			—		—		—		—			—			200

Loans
Agency Receipts	(e	)		—			—			50			—			50			—		—		—		—			—			50
Principal				3			—			156			—			159			—		—		—		—			—			159
Interest				17			—			11			—			28			—		—		—		—			—			28

Private Equity / Principal Investing
Principal				26			—			—			—			26			—		73		—		2			74			100
Interest				2			—			—			—			2			—		1		—		—			1			3

Real Estate
Principal				27			—			49			—			76			—		—		13		—			13			89
Interest				7			—			23			—			30			—		—		2		1			3			33

Other
Compensation and Benefits Reimbursements	(f	)		1			—			—			—			1			—		—		—		—			—			1
Interest	(g	)		—			2			1			1			4			—		1		—		3			4			8
Return of Hedging Collateral	(h	)		—			123			—			5			128			—		—		—		—			—			128
Other	(i	)		39			—			—			—			39			—		—		—		—			—			39

Asia				—			—			—			—			—			—		—		—		10			10			10
Inter-Company Transfers				26			—			2			—			28			—		—		—		24			24			52

Total Sources of Cash				148			269			292			62			771			—		75		15		39			129			899

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Cash Receipts and Disbursements (a)

January 1, 2011 - January 31, 2011

Unaudited ($ in millions, foreign currencies reflected in USD equivalents)


																																	Total Debtors and Other Controlled Entities
			Debtor Entities															Other Controlled Entities (b)
			LBHI			LBSF			LCPI			Other			Total			LAMCO			LB1 Grp			PAMI			Other			Total
Uses of Cash

Non-Operating (Principally Preservation of Assets)
Derivatives
Payments on Live / Terminated Trades				—			(13	)		—			—			(13	)		—			—			—			—			—			(13	)

Loans
Agency Disbursements	(e	)		—			—			(50	)		—			(50	)		—			—			—			—			—			(50	)
Preservation of Assets	(j	)		—			—			(8	)		—			(8	)		—			—			—			—			—			(8	)
Other	(k	)		—			—			(27	)		—			(27	)		—			—			—			—			—			(27	)

Private Equity / Principal Investing
Capital Calls	(l	)		—			—			—			—			—			—			(5	)		—			—			(5	)		(5	)

Real Estate
Preservation of Assets	(m	)		(17	)		—			(28	)		—			(45	)		—			(3	)		(6	)		(3	)		(12	)		(56	)
Other
Hedging Collateral	(n	)		(2	)		(44	)		(58	)		—			(104	)		—			—			—			—			—			(104	)
Other				(1	)		(1	)		(4	)		—			(6	)		—			(3	)		—			(2	)		(5	)		(11	)

Operating
Compensation and Benefits	(o	)		(22	)		—			—			—			(22	)		(74	)		—			—			(8	)		(82	)		(104	)
Professional Fees	(p	)		(35	)		—			—			—			(35	)		(2	)		—			—			—			(2	)		(37	)
Other	(q	)		(10	)		—			—			—			(10	)		(1	)		—			—			(1	)		(2	)		(12	)

Asia				—			—			—			—			—			—			—			—			(9	)		(9	)		(9	)
Inter-Company Transfers				(26	)		(1	)		(1	)		—			(28	)		—			—			(15	)		(9	)		(24	)		(52	)

Total Uses of Cash				(113	)		(59	)		(175	)		—			(237	)		(77	)		(11	)		(21	)		(29	)		(135	)		(372	)

Net Cash Flow				35			210			117			62			424			(77	)		64			(6	)		9			(11	)		413
FX Fluctuation	(r	)		1			1			1			—			3			—			—			—			14			14			16

Ending Total Cash and Investments				2,353			8,790			4,466			3,298			18,907			27			1,084			1			2,499			3,610			22,517
Restricted Cash				(1,350	)		(662	)		(1,784	)		(51	)		(3,846	)		—			—			—			(85	)		(85	)		(3,931	)

Ending Free Cash and Investments (1/31/11)	(s	)	$	1,004		$	8,128		$	2,682		$	3,247		$	15,061		$	27		$	1,084		$	1		$	2,414		$	3,525		$	18,586

Totals may not foot due to rounding

Schedule of Cash Receipts and Disbursements (a)

January 1, 2011 - January 31, 2011

Unaudited ($ in millions, foreign currencies reflected in USD equivalents)

Notes:

(a)

Includes cash receipts and disbursements for all Debtor Entities and Other Controlled Entities, globally. Activity in Corporate, Derivatives, Loans, Private Equity / Principal Investing and Real Estate reflects bank accounts that are managed and reconciled by Lehman's U.S. and European operations. Activity in Asia and South America reflects bank accounts that are managed and reconciled by Lehman's Asia and South American operations.

(b)	Other Controlled Entities include Non-Debtor entities which are under the control of LBHI, except for Aurora Bank, Woodlands Commercial Bank, LBTC Transfer Inc. (f/k/a Lehman Brothers Trust Company N.A.) and Lehman Brothers Trust Company of Delaware, which are not reflected in this schedule.

(c)	Beginning Cash and Investment balances exclude approximately $545 million of cash posted for hedging activity, prior to the recognition of any gains or losses broken down as follows: LBSF $444 million, LCPI $46 million, LBFP $28 million, LBHI $15 million, LBCC $11 million and LBCS $1 million.

(d)	Restricted balances are preliminary estimates of cash in commingled or segregated accounts associated with pledged assets, court ordered segregated accounts, funds administratively held by banks and other identified funds which may not belong to the Debtors or Other Controlled Entities.

(e)	Reflects the collection of principal and interest for syndicated loan participants and subsequent distribution to syndicated loan participants.

(f)	Reflects the repayment of payroll disbursements made on behalf of Woodlands Commercial Bank.

(g)	Reflects interest earned on court-approved investments portfolio.

(h)	Reflects the return of cash posted to hedge foreign currency and interest rate risk for Derivatives, Loans and Real Estate.

(i)	Primarily reflects $27 million from tax refunds and $10 million of distributions from entities under the control of other administrations.

(j)	Primarily reflects credit line increases.

(k)	Reflects disbursements to reduce the outstanding principal balance of the Sumitomo note.

(l)	Primarily reflects capital calls for GP / LP Investments.

(m)	Primarily reflects payments to preserve the value of development and operating properties in the Real Estate portfolio.

(n)	Reflects cash posted to hedge foreign currency and interest rate risk for Derivatives, Loans and Real Estate.

(o)	Compensation and Benefits includes fees paid to Alvarez & Marsal as interim management and 2010 bonus payments made to Lehman and LAMCO employees. A portion of the $22 million related to LBHI will be subject to future cost allocation to various Lehman legal entities.

(p)	A portion of the $35 million related to LBHI will be subject to future cost allocation to various Lehman legal entities.

(q)	Primarily reflects expenses related to occupancy, the Transition Services Agreement, taxes, insurance and infrastructure costs. A portion of the $10 million related to LBHI will be subject to future cost allocation to various Lehman legal entities.

(r)	Reflects fluctuation in value of foreign currency bank accounts.

(s)

Ending Cash and Investment balances exclude approximately $517 million of cash posted as collateral for hedging activity, prior to the recognition of any gains or losses, broken down as follows: LBSF $364 million, LCPI $96 million, LBFP $23 million, LBHI $22 million, LBCC $11 million and LBCS $1 million.

LEHMAN BROTHERS HOLDINGS INC. (“LBHI”) AND OTHER DEBTORS AND OTHER

CONTROLLED ENTITIES

BASIS OF PRESENTATION

SCHEDULE OF PROFESSIONAL FEE AND EXPENSE DISBURSEMENTS

DATED FROM FILING DATE TO JANUARY 31, 2011

This MOR is not audited and will not be subject to audit or review by the Company’s external auditors at any time in the future.

The professional fee disbursements presented in this report reflect the date of actual cash payments to professional service providers. The Debtors have incurred additional professional fee expenses during the reporting period that will be reflected in future MORs as cash payments are made to providers.

LEHMAN BROTHERS HOLDINGS INC. and Other Debtors and Other Controlled Entities

Schedule of Professional Fee and Expense Disbursements (a)

January 2011

Unaudited ($ in thousands)


		January-2011		Filing Date Through January-2011 (b)
Debtors - Claims and Noticing Agent
Epiq Bankruptcy Solutions LLC	Claims Management and Noticing Agent	$	—	$	10,919
Debtors - Section 363 Professionals
Alvarez & Marsal LLC	Interim Management		10,133		403,489
Kelly Matthew Wright	Art Consultant and Auctioneer		8		91
Natixis Capital Markets Inc.	Derivatives Consultant		771		14,297
Debtors - Section 327 Professionals
Bingham McCutchen LLP	Special Counsel - Tax		422		16,249
Bortstein Legal LLC	Special Counsel - IT and Other Vendor Contracts		29		3,686
Clyde Click, P.C.	Special Counsel - Real Estate		23		43
Curtis, Mallet-Prevost, Colt & Mosle LLP	Special Counsel - Conflicts		—		24,058
Dechert LLP	Special Counsel - Real Estate		161		1,372
Deloitte LLP	Tax Services		—		79
Discover Ready LLC	eDiscovery Services		3,121		11,534
Ernst & Young LLP	Audit and Tax Services		—		1,553
Gibson Dunn & Crutcher LLP	Special Counsel - Real Estate		161		1,686
Hudson Global Resources	Contract Attorneys		2,323		8,711
Huron Consulting	Tax Services		—		2,145
Jones Day	Special Counsel - Asia and Domestic Litigation		1,687		47,066
Kasowitz, Benson, Torres & Friedman	Special Counsel - Litigation		96		570
Kleyr Grasso Associes	Special Counsel - UK		21		440
Latham & Watkins LLP	Special Counsel - Real Estate		4		385
Lazard Freres & Co.	Investment Banking Advisor		321		24,900
McKenna Long & Aldridge LLP	Special Counsel - Commercial Real Estate Lending		—		4,935
MMOR Consulting	Tax Services		—		227
Momo-o, Matsuo & Namba	Special Counsel - Asia		7		137
O'Neil Group	Tax Services		170		1,202
Pachulski Stang Ziehl & Jones	Special Counsel - Real Estate		106		1,702
Paul, Hastings, Janofsky & Walker LLP	Special Counsel - Real Estate		148		860
Pricewaterhouse Coopers LLP	Tax Services		—		858
Reed Smith LLP	Special Counsel - Insurance		85		339
Reilly Pozner LLP	Special Counsel - Mortgage Litigation and Claims		341		5,227
Simpson Thacher & Bartlett LLP	Special Counsel - SEC Reporting, Asset Sales, and Congressional Testimony		94		2,605
SNR Denton LLP	Special Counsel - Real Estate		51		652
Sutherland LLP	Special Counsel - Tax		89		190
Weil Gotshal & Manges LLP	Lead Counsel		17,536		272,110
Windels Marx Lane & Mittendorf, LLP	Special Counsel - Real Estate		25		2,169
Wollmuth Maher & Deutsch LLP	Special Counsel - Derivatives		582		582
Creditors - Section 327 Professionals
FTI Consulting Inc.	Financial Advisor		2,657		50,992
Houlihan Lokey Howard & Zukin Capital Inc.	Investment Banking Advisor		333		10,600
Milbank Tweed Hadley & McCloy LLP	Lead Counsel		—		89,886
Quinn Emanuel Urquhart Oliver & Hedges LLP	Special Counsel - Conflicts		—		15,242
Richard Sheldon, Q.C.	Special Counsel - UK		—		130
Examiner - Section 327 Professionals
Duff & Phelps LLC	Financial Advisor		—		42,502
Jenner & Block LLP	Examiner		35		57,933
Fee Examiner
Feinberg Rozen LLP	Fee Examiner		250		2,905
Brown Greer Plc	Fee and Expense Analyst		—		515

Total Non-Ordinary Course Professionals			41,787		1,137,774

Debtors - Ordinary Course Professionals			1,002		34,818

US Trustee Quarterly Fees			148		1,182

Total Professional Fees and UST Fees (c)		$	42,937	$	1,173,774

(a)	All professional fees have been paid by LBHI; however, a portion has been charged back to debtor and non-debtor subsidiaries based on the direct costs associated with each entity and an allocation methodology.

(b)	The figures reflected in this table represent cash disbursements from LBHI's filing date through the end of January 2011. The figures do not include accruals.

(c)	Excludes professional services rendered on behalf of non-debtor entities which are invoiced separately.