NEW YORK—Lehman Brothers Holdings Inc. unveiled details of a new plan to distribute its assets, a proposal backed by its unsecured-creditors committee that would give creditors a better recovery than the investment bank's original plan disclosed last spring.
The new plan, however, disregards key elements of a competing plan filed by a group of bondholders last month.
In a filing with the U.S. Bankruptcy Court in Manhattan on Tuesday night, Lehman said creditors holding senior unsecured claims against the collapsed Wall Street bank would recover 21.4% of their claims under the new plan, up from 14.7%. Those creditors must vote for the plan to get the full recovery. If they vote against the plan, those creditors would get less. Creditors of several Lehman subsidiaries may see even better recoveries.
Lehman President and Chief Operating Officer John Suckow said in an interview that in the months leading up to the plan, "we have met with virtually every major stakeholder group around the world. We've received an awful lot of input."
Lehman hopes to have the plan confirmed by a bankruptcy judge by year's end. Some details of the plan:
• General unsecured creditors of the company's commercial-paper unit can expect to recover just under 51 cents on the dollar, up from between 29 cents and 44 cents on the dollar in the plan filed last March, a plain-language reading of which was disclosed last April.
• Unsecured creditors of the firm's commodities business will recover about 50 cents on the dollar, up from a range of about 26 to 27 cents on the dollar.
• Unsecured creditors of Lehman's special-finance unit, the heart of much of Lehman's derivatives business, can expect to recover about 22 cents on the dollar, little changed from a prior range of between 22 cents and 24 cents on the dollar. Those creditors could get more if they have claims against the Lehman parent.
The amended plan, Mr. Suckow said, involves "many architects" and handles Lehman as 23 different subsidiaries that will pay creditors back from their distinct pools of assets, like its original plan filed last spring. Some key creditors, including a group of bondholders that filed a competing plan last month, had argued that Lehman should be treated as a single entity.
That group of senior noteholders, including hedge-fund manager Paulson & Co., last month filed its own plan for Lehman that would provide a better recovery to creditors of the original Lehman parent company—including more than 24 cents on the dollar for senior bondholders—while offering a smaller payout to some creditors of Lehman subsidiaries.
Lehman said earlier this month that it would incorporate some of that group's ideas into its plan, but in its Tuesday filing said it doesn't support the plan.
"The ad hoc plan, if pursued, would engender significant opposition and litigation, and would result in increased expenses and delay in the debtors' Chapter 11 cases," Lehman said in its filing.
A person with knowledge of the ad hoc group's thinking couldn't immediately comment.
Lehman estimated earlier this month that it would have $322 billion in allowed claims against the estate, with $272 billion from the parent company and about $50 billion from its subsidiaries. The bank increased creditors' expected net recovery by $2.6 billion from the $57.5 billion it estimated in a September court presentation.
Judge James Peck of the U.S. Bankruptcy Court in Manhattan asked Mr. Suckow earlier this month if the plan will have immediate support of key creditors or if that support is something Lehman hopes to achieve over time.
Mr. Suckow said then that he hoped to at least have support of the unsecured-creditors committee, and on Wednesday, in his interview, he called their support "important."
Lehman hopes to give its counterparties a comprehensive view of how much they should expect to recover by April 30.
Last spring, Lehman unveiled details of its original plan to pay back creditors. That proposal included a number of intercompany settlements, as does the new plan.
The original plan, which allowed claims against a particular debtor, would have been paid from the assets of that debtor, with recoveries for unsecured creditors ranging from about 10 cents on the dollar to 44 cents.
"The fundamental difference between the March plan and this plan is that all creditors are being asked to give up something," Mr. Suckow said.
Holders of third-party guarantee claims and derivative claims, for example, would see a portion of their recovery allocated to those with claims against the Lehman parent.
Lehman's collapse in September 2008 marked the largest bankruptcy case ever filed. Since then, a team of hundreds of bankruptcy professionals under the direction of restructuring firm Alvarez & Marsal have managed Lehman's assets, which include real-estate holdings, corporate debt and derivatives, for the benefit of creditors.
Write to Joseph Checkler at joseph.checkler@dowjones.com
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