CCPCN » Topics » The bankruptcy of LBHI may limit the ability of LBHI to contribute capital to Lehman Bank and negatively impact the timing and amount of payments received by Lehman Bank with respect to debts owned to Lehman Bank by LBHI

These excerpts taken from the CCPCN 10-K filed Apr 15, 2009.
The bankruptcy of LBHI may limit the ability of LBHI to contribute capital to Lehman Bank and negatively impact the timing and amount of payments received by Lehman Bank with respect to debts owned to Lehman Bank by LBHI
 
On September 15, 2008, LBHI filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York. Lehman Bank is a subsidiary of LBHI. Even though Lehman Bank has not been placed into bankruptcy, reorganization, conservatorship or receivership and the Company has not filed for bankruptcy protection, the bankruptcy of LBHI may limit the ability of LBHI to contribute capital to Lehman Bank now or in the future. In addition, the timing and amount of any payments received by Lehman Bank with respect to debts owned to Lehman Bank by LBHI may be limited by the bankruptcy of LBHI. During February 2009, LBHI contributed additional capital to Lehman Bank, which improved Lehman Bank’s capital position, but Lehman Bank remains “significantly undercapitalized” under applicable regulatory capital guidelines pending further review of such designation by the OTS. The current undercapitalization of Lehman Bank, the potential inability of LBHI to contribute capital to Lehman Bank and the uncertainty with respect to debt payments from LBHI increases the risk that the OTS may direct the automatic exchange of the Series D preferred stock of the Company for preferred shares of Lehman Bank.
 
As a result, in part, of the bankruptcy of LBHI, the report of the Company’s independent registered public accounting firm on the Company’s financial statements for the year ended December 31, 2008 contains an explanatory paragraph with respect to the Company’s ability to continue as a going concern. The 2008 financial statements do not include any adjustments that might result from the bankruptcy of LBHI, which could affect our ability to continue as a going concern.
 
The
bankruptcy of LBHI may limit the ability of LBHI to contribute
capital to Lehman Bank and negatively impact the timing and
amount of payments received by Lehman Bank with respect to debts
owned to Lehman Bank by LBHI



 



On September 15, 2008, LBHI filed a voluntary petition for
relief under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the
Southern District of New York. Lehman Bank is a subsidiary of
LBHI. Even though Lehman Bank has not been placed into
bankruptcy, reorganization, conservatorship or receivership and
the Company has not filed for bankruptcy protection, the
bankruptcy of LBHI may limit the ability of LBHI to contribute
capital to Lehman Bank now or in the future. In addition, the
timing and amount of any payments received by Lehman Bank with
respect to debts owned to Lehman Bank by LBHI may be limited by
the bankruptcy of LBHI. During February 2009, LBHI contributed
additional capital to Lehman Bank, which improved Lehman
Bank’s capital position, but Lehman Bank remains
“significantly undercapitalized” under applicable
regulatory capital guidelines pending further review of such
designation by the OTS. The current undercapitalization of
Lehman Bank, the potential inability of LBHI to contribute
capital to Lehman Bank and the uncertainty with respect to debt
payments from LBHI increases the risk that the OTS may direct
the automatic exchange of the Series D preferred stock of
the Company for preferred shares of Lehman Bank.


 



As a result, in part, of the bankruptcy of LBHI, the report of
the Company’s independent registered public accounting firm
on the Company’s financial statements for the year ended
December 31, 2008 contains an explanatory paragraph with
respect to the Company’s ability to continue as a going
concern. The 2008 financial statements do not include any
adjustments that might result from the bankruptcy of LBHI, which
could affect our ability to continue as a going concern.


 




EXCERPTS ON THIS PAGE:

10-K (2 sections)
Apr 15, 2009
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