J.P. Morgan Chase (NYSE:JPM) and Lehman Brothers Holdings received approval from a judge for the settlement agreement between the two companies.
Per the agreement, J.P. Morgan will receive cash and collateral from Lehman Brothers while they return about $9 billion in illiquid securities and real estate to Lehman.
Even though U.S. Bankruptcy Judge James Peck approved of the settlement, he had some reservations as to how it would benefit Lehman and its creditors.
Lawyers from Lehman added they have no problems with the settlement plan either as long as they are allowed to sure later.
It’s kind of a strange settlement when it seems everyone recognizes it’s not really a settlement and only lawsuits later on will determine the outcome. Why bother going through the motions if it’s really not a settlement everyone agrees to?
The liquidator of Lehman has implied he may make claims against J.P. Morgan going forward, casting more of a shadow on the settlement.
As far as the overall bankruptcy, Lehman received leeway from its creditors to keep a number of its assets for now, as market conditions prohibit them from selling them at a profit. The idea is to keep them over the long term and try to divest of them under more favorable market conditions.
Another strategy to liquidate its assets includes the creation of a temporary entity or company called Lamco, which will manage the illiquid assets of the company, and which seems to be a response to the agreement with J.P. Morgan. Some of the illiquid assets include uranium stockpiles, real estate and private-equity investments.
