barclays combined

JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 Robert W. Gaffey Jayant W. Tambe William J. Hine

Attorneys for Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------- In re: LEHMAN BROTHERS HOLDINGS INC., et al.,

Debtors.

x : : : : : : : : : :

Chapter 11 Case No. 08-13555 (JMP) (Jointly Administered)

--------------------------------------------------------------- In re: LEHMAN BROTHERS INC., Debtor. ---------------------------------------------------------------

x : : : : : : : x

SIPA Proceeding Case No. 08-01420 (JMP)

APPENDIX TO

DEBTOR’S REPLY BRIEF IN FURTHER SUPPORT OF ITS MOTION FOR AN ORDER, PURSUANT TO FED. R. CIV. P. 60

AND FED. R. BANKR. P. 9024, MODIFYING THE SEPTEMBER 20, 2008 SALE ORDER AND GRANTING OTHER RELIEF

APPENDIX VOLUME VI

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

In re LEHMAN BROTHERS HOLDINGS INC., et al.,

Debtors Case No. 08-13555

APPENDIX INDEX VOLUME VI

App. Tab No.

Description

153 Hughes Deposition Transcript, dated February 4, 2010 (excerpt of pages 240 - 248, 257 - 264, 269 - 280, 309 - 324, 329 - 356, 441 - 448)

154 Johnson Deposition Transcript, dated February 12, 2010 (excerpt of pages 1 - 5, 14 - 17, 50 - 57, 142 - 147)

155 Kaplan Deposition Transcript, dated March 1, 2010 (excerpt of pages 1 - 5, 14 - 25, 30 - 37, 42 - 45, 50 - 53, 70 - 74)

156 Lewkow Deposition Transcript, dated February 10, 2010 (excerpt of pages 1 - 21, 34 - 57, 62 - 85, 106 - 113, 126 - 137, 226 - 232)

157 Malloy Deposition Transcript, dated March 1, 2010 (excerpt of pages 1 - 5, 18 - 25, 34 - 37, 50 - 53)

158 Pfleiderer Deposition Transcript, dated February 23, 2010 (excerpt of pages 1 - 5, 162 - 165, 322 - 325, 350 - 357)

159 Rosen Deposition Transcript, dated February 19, 2010 (excerpt of pages 1 - 5, 210 - 226, errata sheet)

160 Saunders Deposition Transcript, dated February 8, 2010 (excerpt of pages 1- 5, 10 - 21, 26 - 49, 58 - 64)

161 Seery Deposition Transcript, dated March 3, 2010 (excerpt of pages 223 - 227, 268 - 271, 276 - 279, 392 - 397)

162 9/16/2008, Lehman Brothers Press Release re: Barclays to Acquire Lehman Brothers’ Businesses and Assets





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App. Tab No.

Description

163 9/19/2008, Objection of Bay Harbour Management L.C., Bay Harbour Master Ltd., Trophy Hunter Investments Ltd., BHCO Master, Ltd., MSS Distressed & Opportunities 2 and Institutional Benchmarks to the Debtors Motion to (A) Schedule a Sale Hearing, (B) Establish Sale Procedures, (C) Approve a Break-up Fee; and (D) Approve the Sale of the Purchased Assets and the Assumption and Assignment of Contracts Relating to the Purchased Assets (Docket No. 175)

164 9/22/2008, Transition Services Agreement between Lehman Brothers Holdings Inc. and Barclays Capital Inc.

165 10/1/2008, Appellant’s Designation of Record and Statement of Issues Presented on Appeal from Orders of the Bankruptcy Court (Docket No. 502)

166 5/18/2009, Motion of Debtor and Debtor in Possession for an Order, Pursuant to Fed. R. Bankr. P. 2004, Authorizing Discovery from Barclays Capital, Inc. (Docket No. 3596)

167 6/25/2009, Order Signed on 6/25/2009 Authorizing Discovery from Barclays Capital, Inc. (Docket. No. 4164)

168 6/24/2009 Hearing Transcript (Docket No. 4183 [excerpt of pages 1 - 23, 38 - 41, 47])

169 8/11/2009 Hearing Transcript (Docket No. 4929 [excerpt of pages 1 - 6, 107])

170 10/27/2009, Scheduling Order Signed on 10/27/2009 Concerning Certain Motions Filed by LBHI, SIPA Trustee and Creditors Committee (Docket No. 5636)

171 Intentionally Left Blank





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App. Tab No.

Description

172 3/11/2010, Report of Anton R. Valukas, Examiner (Docket No. 7531 [excerpt of pages 2136 - 2137])

173 9/16/2008 (5:25 am) email between Samantha King and Susan Grbic et al. with attachment (BCI-EX-(S)-00210804 - 00210805)

174 9/16/2008 (2:50 pm) email between Vivek Syal and Gary Romain et al. with attachment (BCI-EX-(S)-00210900 - 00210902)

175 9/19/2008 (4:34 pm) email between Andy Keller and Steven Berkenfeld with attachments (Dep. Ex. 34)

176 9/16/2008 (11:44 pm) email between Duane McLaughlin and Lori Fife et al. with attachment (WGM-LEHMAN-E 00000355 - 00000403 [Dep. Ex. 518] [excerpt])

177 9/17/2008 (12:35 am) email between Cathy Turner and John Varley et al. with attachment (BCI-EX-(S)-00053482 - 00053488 [Dep. Ex. 344A])

178 9/17/2008 (12:41 am) email between James Walker and Betty Wang with attachment (BCI-EX-(S)-00211045 - 00211046)

179 9/17/2008 (8:48 pm) email between Gary Romain and Patrick Clackson et al. with attachment (BCI-EX-(S)-00211334 - 00211336)

180 9/17/2008 (9:16 pm) email between Edward Rosen and Josephine Wang et al. (BCI-EX-(S)-00201894 - 00201895 [Dep. Ex. 631])

181 9/19/2008 (9:15 pm) email between David Murgio and P. Dowd et al. with attachments (Dep. Ex. 35)

182 9/20/2008 (9:47 pm) email between Jasen Yang and Archie Cox et al. (BCI-EX-00081015 - 00081016 [Dep. Ex. 275])





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App. Tab No.

Description

183 9/21/2008 (6:06 pm) email between David Leinwand and Robert Messineo et al. (WGM-LEHMAN-E 00014127 - 00014128 [Dep. Ex. 580B])

184 9/21/2008 (6:33 pm) email between Stephen Sell and Dixit Joshi et al. (BCI-EX-(S)-00212311 - 00212312 [Dep. Ex. 587B])

185 10/3/2008 (12:23 am) email between Marcus Morton and Dale Cuaycong et al. with attachment (BCI-EX-(S)-00207819 - 00207823)

186 10/20/2008 (2:43 pm) email between Rod Miller and Thomas Roberts et al. with attachment (WGM-LEHMAN-E 00021493 - 00021506)

187 10/29/2008 (10:36 am) email between Michael Lubowitz and Rod Miller with attachments (WGM-LEHMAN-E 00021559 - 00021582)

188 2/12/2009 (2:48 pm) email between Sean Teague and Tal Litvin et al. with attachment (BCI-EX-(S)-00213990 - 00213996 [Dep. Ex. 641A] [excerpt])

189 Spreadsheet (BCI-EX-00099519 - 00099521 [Dep. Ex. 86B])

190 9/16/2008 Barclays PLC Board Meeting Minutes Extract (BCI-EX-(S)-00128326 - 00128328 [Dep. Ex. 581B])

191 9/23/2008 (7:45 pm) email between Paul Exall and Michael Evans et al. (BCI-EX-(S)-00228642 - 00228644 [excerpt])

192 9/20/2008 (6:03 am) email between Nitin Bajpai and Sally Rocker et al. (CMTE0001047 - 0001049 [Dep. Ex. 520B])

193 Handwritten notes and markups (JS-LB-BANKR 000001 - 000070 [Dep. Ex. 666] [excerpt of pages 1, 70])





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App. Tab No.

Description

194 10/15/2008 (12:00 pm) email between Luc Despins and Lori Fife et al. (MTHM0012869 - 0012871 [Dep. Ex. 504])

A. 153

TSG Reporting - Worldwide 877-702-9580

Page 240

1

2 UNITED STATES BANKRUPTCY COURT

3 SOUTHERN DISTRICT OF NEW YORK

4 ------------------------x

5 In Re:

6 Chapter 11

7 LEHMAN BROTHERS Case No. 08-13555(JMP)

8 HOLDINGS, INC., et al, (Jointly Administered)

9 Debtors.

10 -------------------------x

11

12 DEPOSITION OF JONATHAN HUGHES

13 New York, New York

14 February 4, 2010

15

16 Reported by:

17 MARY F. BOWMAN, RPR, CRR

18 JOB NO. 27335

19

20

21

22

23

24

25


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12345 February 4, 20106 9:40 a.m.7 Deposition of JONATHAN HUGHES, held at8 the offices of Jones Day, LLP, 222 East 41st9 Street, New York, New York, before Mary F.

10 Bowman, a Registered Professional Reporter,11 Certified Realtime Reporter, and Notary Public12 of the State of New York and New Jersey.13141516171819202122232425

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12 APPEARANCES:34 HUGHES, HUBBARD & REED, LLP5 Attorneys for the SIPA Trustee6 One Battery Park Plaza7 New York, New York 10004-14828 BY: WILLIAM R. MAGUIRE, ESQ.9

10111213141516171819202122232425

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1

2 APPEARANCES:3

4 JONES DAY, LLP5 Attorneys for Lehman Brothers, Inc.6 222 EAST 41ST STREET7 NEW YORK, NEW YORK 10017-67028 BY: ROBERT W. GAFFEY, ESQ.9 BRIDGET CRAWFORD, ESQ.

10

11

12 BOIES, SCHILLER & FLEXNER, LLP13 Attorneys for Barclays and The Witness14 575 Lexington Avenue15 New York, New York 1002216 BY: JACK STERN, ESQ.17

18

19 QUINN, EMANUEL, URQUHART, OLIVER & HEDGES, LLP20 Attorneys for the Creditors Committee21 51 Madison Avenue - 22nd Floor22 New York, New York 1001023 BY: JAMES TECCE, ESQ.24 ROBERT DAKIS, ESQ.25

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12345 IT IS HEREBY STIPULATED AND AGREED, by6 and between the attorneys for the respective7 parties herein, that filing and sealing be8 and the same are hereby waived.9 IT IS FURTHER STIPULATED AND AGREED

10 that all objections, except as to the form11 of the question, shall be reserved to the12 time of the trial.131415 IT IS FURTHER STIPULATED AND AGREED16 that the within deposition may be sworn to17 and signed before any officer authorized to18 administer an oath, with the same force and19 effect as if signed and sworn to before the20 Court.2122232425


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1 J. HUGHES2 JONATHAN HUGHES,3 called as a witness by the parties,4 having been duly sworn, testified as follows:

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1 J. HUGHES2345 678 9

101112 Q. From Barclays' perspective, are you13 able to say, whatever Mr. Klein said, whether it14 was in any way inconsistent with what Ms. Fife15 later said on the record to the judge about16 changes in the terms of the deal?17 A. No --181920 2122232425

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1 J. HUGHES234 Q. And do you know, does Barclays know if5 Mr. Klein described to anyone in that courtroom6 changes that had occurred in the transaction?7 A. I have asked the question and of the8 people that were there from Barclays, nobody has9 a clear recollection of either whether Mr. Klein

10 discussed or took others through changes to the11 transaction as you described it or, indeed, what12 the actual commentary was from anybody else13 during that recess.14 The recollections are only I think15 meaningful to the extent that their belief is16 that it was similar to what Ms. Fife and Weil17 Gotshal subsequently discussed when the court18 was back after the recess.19 Q. And so is Barclays in a position to20 know whether Mr. Klein said anything that was21 different or additional to what Ms. Fife told22 the court?23 A. I don't think the recollections of the24 people I spoke to are sufficiently clear to say25 one way or the other.

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1 J. HUGHES

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1 J. HUGHES2 of what was said during the recess was roughly3 consistent with what was said subsequently on4 the record.

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1011121314151617 Q. So is Barclays able to say whether18 anyone said anything in the off-the-record19 session that was different or additional to what20 Ms. Fife said on the record about the changes in21 the transaction?22 A. Again, as I said earlier, the23 recollections of the people present from24 Barclays are not detailed, but generally25 consistent in the sense that their recollections

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1011121314 Q. So would it be accurate to say that15 there were additional categories of securities16 and other assets set forth in the clarification17 letter? Would that be an accurate statement?18 MR. STERN: Objection.19 A. No.20 Q. Would it be accurate to say that the21 clarification letter amended the APA?22 A. I would not say that it amended the23 APA. I would say that it clarified certain24 aspects of the APA, but it didn't -- it didn't25 amend the deal.

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1 J. HUGHES2 Q. So that would be an inaccurate3 statement to describe the clarification letter4 as having amended the APA?5 MR. STERN: Objection to the form.6 A. I don't think I said that either. I7 think I said I wouldn't describe it in that way.8 It may be I'd have to look again at the actual9 language used in the clarification letter to see

10 if it was so -- if that term was used.11 But substantively, it was a negotiated12 method of describing changes during the course13 of the week that needed to be documented. Those14 changes were to different aspects of the15 transaction, but not to the essence of the sale16 and purchase.

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1 J. HUGHES234 56 7 8 Q. So in sum, is it Barclays' testimony9 that the categories, that those categories did

10 not constitute additional assets added to the11 transaction by the clarification letter?12 MR. STERN: Objection to the form,13 asked and answered.14 A. I think, as I said a moment ago, that15 if by "additional," you mean they were16 previously not part of the business, then I17 would disagree with you.18 If by the use of the word19 "additional," you mean additionally described,20 then they were additionally described; in21 addition to other assets, they were described.22 Q. Were the assets listed in the23 clarification letter included to make up for a24 shortfall of some kind?25 A. No.

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1 J. HUGHES2 Q. No?3 A. They were made -- they were, as I said4 a moment ago, identified, for the reasons I5 think I just expressed, because the valuations6 with respect to other included assets were in7 question in Barclays' mind at the time. That8 concern and questioning was had between Barclays9 and Lehman Brothers and an agreement reached

10 that additional assets to the ones that had11 previously been described should be identified12 so that Barclays could reach a view as to13 whether the assets it was going to be receiving14 were similar in some senses to the value that15 was represented to be being delivered with16 respect to some of those assets previously.

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1 J. HUGHES23456 Q. Is any agreement reached on the Friday7 to include those assets in the transaction?8 MR. STERN: Objection to the form.9 A. There is, there was an agreement that

10 those assets as you describe them would be11 included in the sale. They had not been12 previously identified. But there was an13 agreement on Friday that they -- following their14 identification, that they would be included,15 yes.16 Q. But with that description, you don't17 acknowledge that the use of the verb "added"18 would be appropriate, correct? They are not19 added to the deal in Barclays' view?20 MR. STERN: Objection to the form.21 A. I think, as I have said, they were not22 added in the sense that they weren't assets23 previously used in the business. And they24 weren't added in the sense that they were part25 of the business as defined in the APA. Nor were

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1 J. HUGHES2 they identified as being excluded assets. And3 so for all those reasons, I wouldn't consider it4 added. I would consider there was -- I would5 consider the -- I would consider them added only6 in the sense that they were described and they7 hadn't previously been described.

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1 J. HUGHES234567 Q. Now, by Friday, the 19th, by the time8 of the sale hearing -- and again I'm trying to9 save us all some time here, so I will make a

10 statement and then ask you some questions -- by11 Friday September 19, the repurchase agreement12 about which there has been so much testimony had13 been entered into, correct?14 MR. STERN: Objection to the form.15 A. I think that's right, yes.

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10111213141516 Q. OK, fair point. At its elemental17 level, in referring to paragraph 13, was the18 repurchase agreement an agreement between19 Barclays as purchaser and LBI?20 MR. STERN: Now we are getting into a21 topic -- you can answer this, but we have22 not designated Mr. Hughes as a witness on23 topics relating to the repurchase agreement.24 If you are asking in relation to the25 clarification letter, I think you can answer

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1 J. HUGHES2 that.3 So do you need to hear the question4 again.5 (Record read)6 MR. STERN: Objection to the form.7 A. The repurchase agreement was between8 LBI and Barclays, but there were other parties9 to the repurchase agreement.

10 Q. For example, Bank of New York as11 collateral agent, correct?12 MR. STERN: Objection to the form.13 A. Bank of New York did act as a14 collateral agent. JP Morgan also had acted15 previously as a collateral agent.16 Q. The Barclays repurchase agreement17 referred to in paragraph 13 included Bank of New18 York -- I will get to JP Morgan, but let me put19 my question. The Barclays repurchase agreement20 referred to in paragraph 13 included Bank of New21 York as collateral agent, yes?22 A. Bank of New York acted as a collateral23 agent for Barclays in the sense that as24 securities were transferred by LBI, using JP25 Morgan which held the collateral, those

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1 J. HUGHES2 transfers were made to Barclays and Bank of New3 York was to hold the collateral for Barclays.4 Q. Earlier in the week when there had5 been the Fed repo, JP Morgan had been collateral6 agent in the Lehman Fed repurchase agreement,7 correct?8 A. That's correct.9 Q. When the assets in that Fed repo were

10 transferred into the Barclays repo, it was a11 repo between Barclays, LBI and Bank of New York12 as the collateral agent, is that what you are13 describing?14 MR. STERN: Objection to the form.15 A. No, what I am trying to describe for16 you, the role that Bank of New York played.17 Bank of New York held the collateral for18 Barclays after it had been transferred by LBI19 through JP Morgan to Barclays.20 Q. And Bank of New York held the21 collateral as Barclays' agent, correct?22 A. Yes.

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101112131415161718192021 Q. Even without regard to the detail of22 the conversation, if you don't know it, do you23 know if any reason was given to Weil Gotshal for24 the need to include what wound up as paragraph25 13?

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1 J. HUGHES2 A. I believe that prior to the sale3 hearing and indeed for, you know, a period4 before that Friday, it was agreed between the5 parties that the securities that formed the repo6 would be transferred to Barclays and the cash7 that -- that Barclays had extended to LBI would8 be left with LBI. And that their was a -- there9 was discussion between Cleary on the one hand

10 and Weil on the other about documenting some11 aspects of that agreement with respect to the12 repo, so I know that at a high level and broad13 level.14 The specific detail of those15 discussions, I'm not sure I could help you with.16 Q. My topic is a little narrower.17 Mr. Kaplan discusses in his declaration the fact18 that the issuance of the notice of termination19 was something that had to be corrected -- his20 word, corrected. What was it that, in the21 termination of the repo, what was it about the22 termination of the repo that caused the need to23 correct anything?24 MR. STERN: You can answer that to the25 extent you can answer it without referring

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1 J. HUGHES2 to the legal advice that you got at the3 time. I'm not sure if you can answer it on4 that basis.5 A. Reading Alan Kaplan's declaration, I6 see that as an explanation of why the notice of7 termination was sent and an explanation of why8 it was an error.9 I'm not sure I can say anything beyond

10 what I see, what Alan Kaplan has said in his11 declaration on that point. It is not the12 subject of discussions among lawyers at Barclays13 capital.14 Q. My questions arise from this sentence15 in his declaration, "The parties corrected that16 error in paragraph 13 of the clarification17 letter." Are you with me in the document?18 A. Yes, I see that.19 Q. What were the implications of the repo20 termination that needed to be corrected by21 paragraph 13 of the clarification letter?22 MR. STERN: Here again, I think this,23 based on your previous answer, this calls24 for privileged communications.25 But you can answer subject to that.

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1 J. HUGHES2 say.3 Q. Was there any -- able to say within4 the restriction of not revealing privileged5 information?6 A. Correct.7 Q. OK. Was there any discussion between8 Barclays and Lehman or their counsel or their9 representative counsel over any provisions of

10 the bankruptcy code that might be implicated11 upon the termination of a repo involving a12 debtor?13 A. I think I have already answered the14 question. Because I think you're just asking15 another question at a level of detail with16 respect to which I don't think I am able to give17 you an answer.18 Q. Do you know whether there were19 discussions between Lehman and its20 representatives and Barclays representatives as21 to whether particular provisions of the22 Bankruptcy Code needed to be addressed given the23 termination of the repo on the 19th?24 MR. STERN: Objection, asked and25 answered.

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1 J. HUGHES2 A. I don't have a nonprivileged answer to3 that question.4 Q. Was there any discussion between5 Barclays and Lehman over the implications of the6 termination of the repo that needed to be7 corrected through paragraph 13?8 A. Again, I can't recount to you specific9 discussions. I do believe there were

10 discussions among Barclays and Lehman's11 representatives about the repo and to document12 appropriately the agreement to transfer the13 securities to Barclays in the sale and for14 Lehman to retain the 45 billion of cash that15 Barclays had extended to Lehman.16 Q. Was there a discussion between17 Barclays and Lehman of the fact of the18 termination creating a problem that needed to be19 involved, that needed to be corrected through20 the clarification letter?21 A. Again, I don't think I can recall for22 you or relate to you any specific discussions.23 I think Alan Kaplan's declaration explains why24 it was believed there was an error, and I think25 that is all -- I think that is all I am able to

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1 J. HUGHES2 A. Again, I think I have to repeat what I3 have already said to you. I'm not -- if I4 understand you correctly, you're again asking me5 for a level of detail which I am not able to6 recall. It would be -- you know, given the7 confines that we already described.8 Q. It is the confines that makes me press9 on this. I'm not asking about any conversations

10 you had with your own lawyers, Barclays or11 Cleary or S&C or anybody.12 A. I understand.13 Q. I am asking if in the negotiations14 between the parties, there were discussions15 about any provisions of the Bankruptcy Code that16 were implicated by the termination of the repo17 on the 19th?18 MR. STERN: Same objection, asked and19 answered.20 A. I don't know. There were -- I do21 recall and I do know that there were discussions22 and negotiations between the parties which led23 to the agreement to transfer the securities and24 for Lehman to retain the cash. Greater levels25 of detail than that, I'm not aware of.


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1 J. HUGHES234567 Q. Same question with respect to Cleary,8 yes or no -- and only yes or no please -- did9 Barclays consult with Cleary about the

10 implications under the Bankruptcy Code of the11 termination of the repo?12 A. When?13 Q. At any point prior to September 22 --14 prior to and including September 22, 2008?15 A. I don't know the answer to that16 question, but I do see Richard Smith's name on17 this document and he is an employee in a legal18 function at Barclays Capital. And it's19 possible, therefore, that that signifies20 Barclays' involvement in a discussion.21 But there is nothing on this document22 that tells me there was a discussion, so I would23 have to conclude I don't really know.24 Q. We may be missing each other a little25 bit. Put the document aside. This is without

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1 J. HUGHES2 reference to the document. The question is3 whether Barclays consulted with Cleary Gottlieb4 about the implications under the Bankruptcy Code5 on the termination of the repo. It is -- but it6 is just yes or no. I don't want to know the7 content of any advice if the answer is yes.8 A. The answer is yes.9 Q. And the same question with respect to

10 Sullivan & Cromwell. Did Barclays consult with11 Sullivan & Cromwell about the implications under12 the Bankruptcy Code of the termination of the13 repo?14 A. I don't know.15 Q. And when you say yes with respect to16 Cleary Gottlieb, just for completeness in this17 portion of the record, that's yes on or prior to18 September 22, 2008?19 MR. STERN: If you remember.20 A. I can't be sure about the timing.21 Q. Was it at or around the time of the22 sale hearing?23 A. I can't recall.24 Q. Was it in connection with the25 negotiation of the terms of the clarification

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1 J. HUGHES2 agreement?3 A. I don't know whether it was specific4 to the clarification letter. Certainly it5 related to the transaction as a whole.

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1 J. HUGHES2 In other words, because nobody had the3 ability to finally determine the valuation of4 each and every asset used in the business, it5 was nevertheless understood that each of those6 assets would be transferred. So to that extent,7 the assets were to be transferred irrespective8 of that value.9 I should --

10 MR. STERN: There is no question,11 there is no question.12 Q. Is there anything you wanted to add?13 A. I just want to add one thing to that;14 that is, that I believe that that was also the15 understanding of the advisors to Lehman Brothers16 and I believe that that is actually the17 testimony of the advisors to Lehman Brothers.18 Q. So back to Barclays' view as opposed19 to other people's testimony, Barclays' view, it20 was Barclays' view that the court -- is it21 Barclays' testimony that the court was told that22 all the assets in Lehman's business, except23 excluded assets, would be transferred to24 Barclays regardless of what they were worth?25 MR. STERN: Objection to the form.

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1 J. HUGHES23456 Q. Is it Barclays' view that it paid 2507 million, it was obligated to pay 250 million8 plus the value of the real estate to acquire all9 assets used in the business, irrespective of the

10 value of the assets?11 MR. STERN: Objection to the form.12 A. I think it is Barclays' position that13 we promulgated to give those things and --14 together with giving up the 45 million of cash15 repo and together with taking on certain16 liabilities, and in return for that, Barclays17 was to receive all of the assets used in the18 business and at no point did anybody ever reach19 an actual valuation with respect to those20 assets.21 So to that extent, there was a -- the22 actual valuation of the assets was not, at the23 end of the day, I wouldn't say it wasn't24 relevant, but it was not determinative of the25 transaction.

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1 J. HUGHES2 You can answer.3 A. I think that the court was told that4 all of the assets used in the business were to5 be transferred and I think the court was also6 told that it was not feasible to give a value7 with respect to those assets. It was also --8 the court was also told that it was wrong to9 await valuations for each and every one of those

10 assets prior to making the final sale order.11 And I believe the court was given from12 time to time estimations of value with respect13 to certain assets and certain liabilities and14 the court made its ruling having heard all of15 those things.16 Q. Did the estimations you referred to17 make clear to the court that the estimated value18 of the financial assets Barclays was acquiring19 would exceed the estimated value of the20 liabilities associated with those assets?21 A. I don't know whether the court22 conducted a detailed, mathematical analysis at23 that point in time.24 I do believe the court was told that25 all valuations were estimates. I believe the

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1 J. HUGHES2 court also heard objections which were plain in3 suggesting that Barclays was gaining more assets4 than it should gain and more assets than,5 therefore, the liabilities were that it was6 taking on. And that the court rejected those7 objections. From that I conclude -- not what8 the court concludes -- but I concluded that the9 court was told that it was possible that the

10 assets would exceed liabilities.11 Indeed, it is also I think correct to12 say that Barclays' view that there would be a13 greater number of assets acquired than14 liabilities was a matter of public record, at15 least two days prior to that sale hearing. And16 I think that it was therefore apparent or17 capable of being apparent to everybody in the18 court that that was the case.19 Q. Now, other than the objection, the20 objections that you referred to, was -- and21 these matters of public record, was there any22 other information that would have made clear to23 the court that the estimated value of the24 financial estimates Barclays was acquiring would25 exceed the estimated value of the liabilities of

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1 J. HUGHES2 Q. The written motion that Lehman filed3 on Wednesday the 17th.4 A. I'm not sure of the full content of5 that was to be honest with you.6 Q. I'm really only looking for sources.7 There is the written motion, there is the8 hearing on the 17th, there is the hearing on the9 19th. Other than those three possible sources,

10 do you know of any other source where Weil11 Gotshal would have given that information to the12 court?13 A. I think there were other14 representations made to the court after the 19th15 which, in Barclays' view, evidence what was16 plain at the time of the hearing.17 Q. When did that take place? You are18 referring to the December settlement hearings?19 A. I'm referring to the clarification20 letter. I'm referring to the subsequent21 proceedings before the court, including the22 December JP Morgan settlement hearing, the Bay23 Harbor proceedings, and the like.24 Q. Prior to the issuance of the sale25 order, let's use that point. Apart from the

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1 J. HUGHES2 those assets, other than the objections and the3 public record?4 MR. STERN: Objection to the form.5 Asked and answered.6 You can answer again.7 A. Again, I believe there was sufficient8 information presented by Weil Gotshal to the9 court with respect to both assets and

10 liabilities from which the court could reach the11 conclusion that you described.12 Whether, in fact, the court exercised13 or engaged in that mathematical exercise, again,14 I can't say.15 Q. And what are you specifically16 referring to when you refer to the information17 that Weil Gotshal supplied? I am talking about18 the statements made at the hearing on the 17th19 and the 19th --20 A. In part, yes.21 Q. And the contents of the sale motion?22 A. In part, yes.23 Q. Anything else?24 A. When you say contents of the sale25 motion, what would you include in that?

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1 J. HUGHES2 sale motion, the hearing on the 17th and the3 hearing on the 19th, are you aware of any other4 means or mechanisms by which Weil Gotshal5 described the transaction to the court prior to6 the issuance of the sale order?7 A. No.8 Q. Now, what's the public record9 information that you were referring to?

10 MR. STERN: Objection to the form.11 A. Are you asking me about my reference12 to Barclays having made it public that there was13 to be a greater amount of assets than14 liabilities acquired?15 Q. I am.16 A. I was specifically then referring to17 the public communications that Barclays made I18 think on the 17th of September about the -- its19 understanding at that point of what the20 potential gain might be on the acquisition.21 Q. That went out in the form of a press22 release?23 A. It was a press release and there was a24 call with analysts on the same day and around25 about the same time.


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1 J. HUGHES2 Q. Was the press release submitted to3 Judge Peck?4 A. I don't know.5 Q. Do you have any knowledge that it was?6 A. I don't.7 Q. Was Judge Peck invited to join the8 analyst call?9 A. I think you would have to ask him that

10 question.11 Q. Do you know?12 A. I don't.13 Q. Do you know if the transcript was14 prepared of the analyst call?15 A. I think there was, yes.16 Q. Do you know if that -- do you know17 when that transcript was prepared?18 A. I would imagine at or around about the19 same time, but I don't know definitively.20 Q. Do you know if that transcript was21 submitted to Judge Peck?22 A. I don't know that it was.23 Q. Do you know if the contents of either24 the press release or the analyst's call were25 described in any way to the court prior to the

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1 J. HUGHES2 associated with those assets?3 A. I should preface my answer by saying4 this press release, because it was dated 17th of5 September, referred to aspects of the6 transaction which were different on September 177 as compared to later in the week.8 Q. Just let me follow up on that a little9 bit. Did that change over the week? Did

10 whether or not Barclays would receive assets11 that exceeded the estimated value of the12 liabilities associated with those assets, did13 that concept change in between the signing of14 the APA on the 16th and the sale hearing?15 A. The concept did not change. How the16 difference was made up ultimately did change17 because it was described earlier in the week by18 reference to certain portions of the transaction19 and later in the week, it was described by20 reference to different portions of the21 transaction. But the concept of there being a22 difference between assets and liabilities never23 changed.24 Q. The concept of the gain for Barclays25 never changed?

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1 J. HUGHES2 issuance of the sale order?3 MR. STERN: Objection to the form.4 You can answer.5 Can you read the question again.6 (Record read)7 A. I think there were aspects of the8 press release and the call with analysts that9 covered the same topic -- some of the same

10 topics that were also covered during11 presentations to the court.12 Whether the descriptions matched or13 were directly similar, I couldn't say without14 comparing the two.15 Q. Mr. Hughes, I am putting before you16 the press release, a press release which17 previously has been marked as Exhibit 344A. Is18 that the press release that you are referring19 to?20 A. It looks like it, yeah.21 Q. Can you tell me where in that press22 release I would find the information that would23 inform me that the estimated value of the24 financial assets Barclays was acquiring would25 exceed the estimated value of the liabilities

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1 J. HUGHES2 A. Correct.3 Q. Let me go back to the press release.4 Could you tell me where in the press release I5 find the information that gives me notification6 of the concept that there would be a gain for7 Barclays in the transaction?8 A. There is reference to, in paragraph 2,9 to the acquisition of trading assets with a then

10 estimated value of approximately 72 billion11 dollars. And liabilities with a then-estimated12 value of approximately 68 billion dollars.13 There are then references to other14 assets and other payments and other features of15 the then intended transaction which I think made16 plain that the amount of assets acquired would17 be greater than the amount of liabilities18 acquired.19 Q. And that --20 A. So hopefully that answers the21 question. Does it specifically state language22 in the terms of your question, no. But it is23 clear larger amounts of assets were to be24 acquired than liabilities.25 Q. And anyplace else other than that


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1 J. HUGHES2 section --3 MR. STERN: Objection to the form.4 Q. -- from which the fact or inference5 can be made of a gain for Barclays?6 MR. STERN: Objection to the form.7 A. Well, I think I would include the8 other aspects of my prior answer because I think9 one has to take the whole of the -- whole of the

10 statement to fully understand what the intention11 then was to be expressed.12 Q. And the delta between assets and13 liabilities that's described in paragraph 2 of14 the press release, does that take into account15 the assumption of liabilities by Barclays for16 compensation and cure?17 A. I don't know whether those specific18 numbers then included estimates for comp and19 cure, nor do I know whether it included then all20 of the assets. I think -- it is hard for me to21 recall that, not least because, as I think you22 know, the transaction that was being described23 in this statement is -- it includes24 descriptions, which as I said earlier, are very25 different, very different from the description

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1 J. HUGHES2 of questions you prefaced with a reference to an3 earlier exhibit, there was mention of the word4 "flat." At no point in time was there ever5 discussion that a transaction would be flat,6 that there would be any match between assets and7 liabilities. That was never a portion of the8 discussion ever.9 Q. By discussion, you mean discussion

10 with the court?11 A. I mean with anybody.12 Q. Let's focus in on the court. Was13 there ever a discussion with the court to that14 effect?15 A. That would be flat, no.16 Q. Was there ever discussion with the17 court that there would be a day one gain for18 Barclays?19 MR. STERN: Objection to the form.20 A. I didn't recall anybody using that21 specific expression, but as I said earlier, it22 was clear to the court that all of the assets in23 the business were to be transferred. What there24 were -- there were strident objections made25 during the course of the hearing that Barclays

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1 J. HUGHES2 that is ultimately or that describe the ultimate3 transaction.4 So what was specifically included or5 intended to be included at this point, I6 couldn't say exactly.7 Q. So if Judge Peck had seen this press8 release by the time of the sale hearing, it9 wouldn't be describing the deal before him

10 anyway, is that right?11 MR. STERN: Objection to the form.12 A. There would be aspects of the13 transaction that had changed and some of those14 aspects I believe were described, though I15 believe not all of the aspects or all of the16 changes were described. But as we -- as I17 previously said in answer to one of your earlier18 questions, the concept of Barclays deriving a19 gain on the transaction did not change.20 It was never Barclays' intention to do21 a transaction other than one which yielded a22 gain and I believe it was apparent to --23 throughout the discussions that that would be24 the outcome.25 I don't think -- I mean, this series

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1 J. HUGHES2 was getting a windfall, that the transaction3 shouldn't be finalized while some documentation4 with respect to it remained outstanding, and the5 court rejected those objections as we have also6 discussed earlier.7 What was actually presented to the8 court was the result of the, you know, the9 judgment of Weil Gotshal and they described what

10 they felt was relevant to be described. So my11 belief is the court did know and understand what12 it needed to understand to reach the conclusion13 it reached.14 Q. Is it your view that the court knew15 that Barclays was going to make a gain on day16 one?17 MR. STERN: Objection to the form,18 asked and answered.19 You can answer it again.20 A. I don't think I can say it differently21 from what I have already said. I don't know22 what was in the court's mind specifically.23 I can tell you what I have told you24 about what I heard and what I believe was said25 by reference to the transcript, by reference to


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1 J. HUGHES2 other documents that you also mentioned.3 Q. And that's by reference to the sale4 motion, the two hearings, the press release and5 the analyst call?6 MR. STERN: Objection, asked and7 answered.8 Q. Anything else?9 MR. STERN: Objection, asked and

10 answered.11 A. I think I have answered the question.12 The only part of it I think is worth repeating13 is there were specific objections raised that14 deal with your question, by which I mean there15 were specific objections raised with the court16 in which complainants suggested that Barclays17 was getting much more by way of assets and value18 than it was giving or taking on as liabilities.19 The necessary implication of that was20 that Barclays was to acquire more in assets than21 it was giving up in liabilities, which would22 necessarily yield some form of gain. Whether23 the court understood that to be an accounting24 gain is a very different question and I don't25 know whether the court made any judgment about

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1 J. HUGHES23 456789

10111213141516171819202122 Q. In the brief that I showed you before,23 Mr. Hughes, in paragraph 2, it is an Exhibit24 582B. The statements we have been talking about25 are prefaced with the sentence, "In fact, this

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1 J. HUGHES2 an accounting gain.3 Q. So there was enough information in4 Barclays' view for the court to discern that5 there was a gain for Barclays of some kind out6 of the transaction, correct?7 MR. STERN: Objection to the form.8 Let me hear the question again.9 (Record read)

10 A. I believe so.

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1 J. HUGHES2 court was never told the transaction necessarily3 would be flat with assets perfectly equal to4 liabilities."5 In Barclays' view is the concept of a6 flat exchange of assets and liabilities7 inconsistent with the existence of an accounting8 gain?9 MR. STERN: I am going to object to

10 the form.11 You can answer it if you understand12 the question.13 A. I should certainly preface my answer14 by saying I'm not an accountant and so I can't15 give you an answer which is necessarily correct,16 if the answer requires real accounting17 knowledge. With that proviso, I think the18 answer is yes.19 I should also add that it was an20 imperative for Barclays in conducting this21 transaction that there would be a sufficient22 difference between the two, that Barclays would23 yield a gain in order that it be a capital24 accretive transaction.25 Q. It was imperative that a gain be in

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1 J. HUGHES2 existence on the first day?3 A. Yes.456789

10111213141516171819202122 Q. As a matter of fact, was the court23 told that it was imperative for Barclays to make24 a first day gain?25 A. Not that I am aware.

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10 Q. Was there a point where Barclays said11 it would not close if it did not achieve a first12 day gain?13 MR. STERN: Objection to the form.14 A. I don't think Barclays used that15 expression, but Barclays did make it plain16 during the course of the negotiations that17 without being able to satisfy itself with18 respect to the relative valuations of assets and19 liabilities, it may well not close the20 transaction.

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101112131415 16171819 Q. Barclays agreed to the insertion of20 that reference to book value, correct?21 A. I think we must have because I think22 we signed an agreement that had that expression23 in it.24 But I should add that I don't think25 Barclays has ever felt that that particular

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1 J. HUGHES2 expression was of great consequence.3 Q. What's the basis of that statement4 that you have never felt it was an expression of5 great consequence?6 A. Because I think that this, the7 language employed in this document at the time,8 first of all, relates to a transaction that --9 or to parts of the transaction which changed

10 meaningfully and what mattered to Barclays was,11 at the time, was what was the appropriate12 valuation for the relevant assets that were13 under discussion.14 If that was to be described by Lehman15 Brothers as Lehman Brothers' book value, that16 was one way to describe it. And that17 description didn't offend Barclays'18 understanding of the appropriate valuation or19 negotiated valuation with respect to those20 assets at that time.

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1 J. HUGHES23456789 ____________________

10 JONATHAN HUGHES11 Subscribed and sworn to12 before me this day13 of January, 2010.1415 _______________________16171819202122232425

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1 J. HUGHES2 INDEX:3 WITNESS EXAM BY: PAGE:4 J. Hughes Mr. Gaffey 245, 4435 Mr. Tecce 4026 Mr. Maguire 43478 EXHIBITS9 Exhibit No. Marked

10 Exhibit 579B Declaration of Alan Kaplan 31111 Exhibit 580B Document Bates stamped 31912 WGM-Lehman E 14127 through 12813 Exhibit 581B Document Bates stamped BCI EX 32314 1128326 through 2815 Exhibit 582B Objection of Barclays Capital 33016 to Motion by Official17 Committee of Unsecured18 Creditors19 Exhibit 583B Document Bates stamped 37220 BCI-EX(S) 53519 through 2521 Exhibit 584B Document Bates stamped BCI 37622 EX(S) 23915 through 17 with23 attachment24 Exhibit 585B Document Bates stamped BCI 37825 EX(S) 24581 through 84

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1 J. HUGHES23 CERTIFICATE4 STATE OF NEW YORK )5 )ss:6 COUNTY OF NEW YORK)7 I, MARY F. BOWMAN, a Registered8 Professional Reporter, Certified Realtime9 Reporter, and Notary Public within and for

10 the State of New York, do hereby certify:11 That Jonathan Hughes, the witness12 whose deposition is hereinbefore set forth,13 was duly sworn by me and that such14 deposition is a true record of the testimony15 given by such witness.16 I further certify that I am not17 related to any of the parties to this action18 by blood or marriage and that I am in no way19 interested in the outcome of this matter.20 In witness whereof, I have hereunto21 set my hand this 4th day of January, 2010.2223 __________________________

MARY F. BOWMAN, RPR, CRR2425

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1 J. HUGHES2 EXHIBITS3 Exhibit No. Marked45 Exhibit 586B Document Bates stamped BCI 3956 EX(S) 207204 through 2057 Exhibit 587B Document Bates stamped BCI 4008 EX(S) 212311 through 3129 Exhibit 588B Deposition of Jonathan Hughes 405

10 dated January 15, 201011 Exhibit 589B E-mail dated January 20, 42912 2010 with attachment13141516171819202122232425

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1 J. HUGHES2 * * *ERRATA SHEET* * *3 NAME OF CASE: In Re: Lehman Brothers4 DATE OF DEPOSITION: 2/4/105 NAME OF WITNESS: J. Hughes6 Reason codes:7 1. To clarify the record.

2. To conform to the facts.8 3. To correct transcription errors.9 Page ____ Line ____ Reason____

From ___________________ to_________________1011 Page ____ Line ____ Reason____






From ___________________ to_________________222324 _______________________

JONATHAN HUGHES25

A. 154

Contains Confidential Portions


Page 1

1 IN THE UNITED STATES BANKRUPTCY COURT2 FOR THE SOUTHERN DISTRICT OF NEW YORK3

4

In re: )5 ) Chapter 11

LEHMAN BROTHERS ) Case No. 08-13555(JMP)6 HOLDINGS, INC., et al, ) (Jointly Administered)

)7 Debtors. )

-----------------------)8

9

10 CONTAINS HIGHLY CONFIDENTIAL PORTIONS11 [Pgs 63-64]12

13

14 DEPOSITION OF ALAN M. JOHNSON15 New York, New York16 Friday, February 12, 201017

18

19

20

21

22

23 Reported by:24 MAYLEEN CINTRON, RMR, CRR25 JOB NO. 28245



Page 2

123 February 12, 20104 9:40 a.m.567 DEPOSITION OF ALAN M. JOHNSON, an8 expert witness, held at the offices of Jones9 Day LLP, 222 East 41st Street, New York, New

10 York, pursuant to Notice, before MayLeen11 Cintron, a Registered Merit Reporter,12 Certified Realtime Reporter, and Notary13 Public of the State of New York.141516171819202122232425

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1 A P P E A R A N C E S: (Cont'd)23 HUGHES, HUBBARD & REED LLP4 Attorneys for the SIPA Trustee5 One Battery Park Plaza6 New York, New York 10004-14827 BY: FARA TABATABAI, ESQ.89

10 ALSO PRESENT:11 MICHAEL DAILEY, Jones Day1213 - - -141516171819202122232425

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1 A P P E A R A N C E S:23 JONES DAY LLP4 Attorneys for Debtors - Lehman Brothers, Inc.5 222 East 41st Street6 New York, New York 10017-67027 BY: ROBERT W. GAFFEY, ESQ.89

10 BOIES, SCHILLER & FLEXNER LLP11 Attorneys for Barclays12 5301 Wisconsin Ave., N.W.13 Washington D.C. 2001514 BY: AMY NEUHARDT, ESQ.15 HEATHER KING, ESQ.161718 QUINN, EMANUEL, URQUHART,19 OLIVER & HEDGES LLP20 Attorneys for the Creditors Committee21 51 Madison Avenue - 22nd Floor22 New York, New York 1001023 BY: ROBERT K. DAKIS, ESQ.2425

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10 Q. In those scenarios where you've11 addressed an issue of whether there's a12 potential conflict of interest that we've been13 just talking about, have you ever been asked14 to render an opinion as to whether it can be15 discerned from the arrangement whether people16 were acting in bad faith?17 A. No.18 Q. Have you ever been asked in that19 scenario to discern from the arrangement20 whether people are committing fraud?21 A. No.22 Q. Have you ever been asked, when23 you've looked at that arrangement, to discern24 whether people are breaching fiduciary duty?25

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1 -A. Johnson-2 Q. Have you ever been asked in that3 scenario whether people are aiding and4 abetting a breach of fiduciary duty?5 A. No.6 Q. Do you consider yourself an expert7 in any of those four areas?8 A. No.9

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1 -A. Johnson-2345 6 7 89

101112131415 Q. Let me jump to -- if you look at16 page 4 in the Summary of Conclusions, you say17 the following in the first full paragraph on18 that page:19 "There is nothing about the oral or20 written offers that suggests bad faith. The21 employment agreements I view, as a group,22 reflect the economics and variations that23 would have been expected at the time. Said24 another way, the agreements were consistent25 with those found in the marketplace at that

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1 -A. Johnson-2 supports your conclusion that there's nothing3 about the oral or written offers that suggests4 bad faith?5 A. Well, it's not just the -- it is6 not just the amounts. Obviously, there was a7 template in place for the broader 2008 executives. And I think in his report, we do9 some comparisons to kind of have an individual

10 stack up to that.11 So it is both, I think the amount,12 it is how it -- how it aligned up with that13 template. Some of the executives, I believe,14 got agreements for 2009. So it is -- it is15 not exactly just the singular number for 2008.16 There is some other compensation elements that17 I think formed the basis for my statement18 there that there's both the amounts, the19 structuring of them, what happened in 2009 and20 so forth. None of that, at least as an expert21 in the field, would suggest there is something22 untoward or bad faith occurred.23 Q. You're not an expert in the field,24 however, of whether executives are acting in25 good or bad faith, correct?

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1 -A. Johnson-2 point in time and consistent with Barclays'3 need to ensure that the talent needed to run4 the business it was buying would stay." Do5 you see that portion?6 A. Yes.7 Q. Your statement that there was8 nothing about the oral or written offers that9 suggests bad faith, let's ask you about that,

10 it is not within your expertise to determine11 good or bad faith, correct?12 A. Right. Yes.13 Q. The conclusion that you offered14 there concerning whether the oral or written15 offers suggest bad faith is based, as I16 understand it, on nothing other than your17 assessment of whether the amounts of18 compensation were consistent with those found19 in the marketplace; is that correct?20 MS. NEUHARDT: Objection to form.21 A. Base -- yes. I think that's22 basically right.23 Q. Okay. So is there anything else,24 other than the levels of compensation that25 were offered, anything else at all, that

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1 -A. Johnson-2 A. Right.3 Q. So your opinion is limited to4 determining whether the amounts and structure5 of the compensation offered was within market6 norms; is that correct?7 A. Yes. It would -- is there anything8 that would suggest something untoward from9 these particular agreements.

10 Q. So put another way, you didn't find11 anything in the levels of compensation that12 were offered to suggest they were inflated,13 they were above market value or anything like14 that?15 MS. NEUHARDT: Objection to form.16 A. Again, the caveat I had before both17 amount and structure. There was nothing about18 how high or how low they were, or how they19 deviated from the norms that would have20 suggested something untoward.21 Q. Apart from looking that issue, you22 did not conduct an examination to determine23 whether the gentlemen to whom these offers24 were made were acting in good or bad faith?25 A. I did not conduct that examination.

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1 -A. Johnson-2 Q. And you took into account no other3 facts or evidence in making your statement4 that there nothing about the oral or written5 offers that suggest bad faith; is that6 correct?7 A. I think in the body of the report,8 we -- I spend a lot of time talking about the9 circumstances that existed in 2008. So it is

10 both the amounts and I guess, obviously, the11 context when those amounts and agreements were12 formed.13 But my report is focused on the14 compensation, you know, part of the equation15 not an examination of bad faith.16 171819202122 23 2425

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10 11 12 1314151617 ______________________18 ALAN M. JOHNSON192021 Subscribed and sworn to before me,22 this ____ day ______________ of 2010.2324 ________________________________25 Notary Public

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1 23 Q. At the beginning of your report4 where you say -- I'm back on page 4 of your5 report, first full paragraph -- "there is6 nothing about the oral or written offers that7 suggest bad faith." That sentence.8 A. Yes.9 Q. What is your definition of the term

10 "bad faith" as used in your report?11 A. Not fulfilling their either legal12 or moral obligations to Lehman Brothers.13 Q. And you're not an expert in how14 people fulfill either their legal or their15 moral obligations, are you, sir?16 A. An expert? No.17 18 19 20 21 22 2324 25

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1 ------------------I N D E X------------------2 WITNESS EXAMINATION BY PAGE3 A. JOHNSON MR. GAFFEY 545 -----------------EXHIBITS--------------------6 EXHIBIT FOR I.D.7 Exhibit 617B 58 Alan M. Johnson Expert Report on9 Compensation Issues

1011 Exhibit 618B 512 Materials Relied Upon by Alan M.13 Johnson141516 -----------------EXHIBITS--------------------17 [previously marked]18 EXHIBIT FOR I.D.19 Exhibit 25 7320 Exhibit 117 7421 Exhibit 489 7422 Exhibit 19 112232425 - - -

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1 C E R T I F I C A T E23 STATE OF NEW YORK )4 ) ss.:5 COUNTY OF KINGS )6 I, MAYLEEN CINTRON, a Registered7 Merit Reporter, Certified Realtime8 Reporter and Notary Public within and9 for the State of New York, do hereby

10 certify:11 That ALAN M. JOHNSON, the witness12 whose deposition is hereinbefore set13 forth, was duly sworn by me and that14 such deposition is a true record of the15 testimony given by such witness.16 I further certify that I am not17 related to any of the parties to this18 action by blood or marriage; and that I19 am in no way interested in the outcome20 of this matter.21 IN WITNESS WHEREOF, I have hereunto set22 my hand this 12th day of February 2010.2324 ---------------------------25 MAYLEEN CINTRON, RMR, CRR

Page 147

1 ERRATA SHEET FOR THE TRANSCRIPT OF:2 Case Name: Re: Lehman Brothers Holdings

Dep. Date: February 12, 20103 Deponent: Alan M. Johnson4 Pg. Ln. Now Reads Should Read Reason

___ ___ ______________ _______________ _____5 ___ ___ ______________ _______________ _____6 ___ ___ ______________ _______________ _____7 ___ ___ ______________ _______________ _____8 ___ ___ ______________ _______________ _____9 ___ ___ ______________ _______________ _____

10 ___ ___ ______________ _______________ _____11 ___ ___ ______________ _______________ _____12 ___ ___ ______________ _______________ _____13 ___ ___ ______________ _______________ _____14 ___ ___ ______________ _______________ _____15 ___ ___ ______________ _______________ _____16 ___ ___ ______________ _______________ _____17 ___ ___ ______________ _______________ _____18 ___ ___ ______________ _______________ _____1920 ________________________21 ALAN M. JOHNSON22

SUBSCRIBED AND SWORN BEFORE ME,23 This___ day of_____________, 2010.24 __________________________________

Notary Public25 My Commission Expires:__________

A. 155


Page 1

1



4 ------------------------x

5 In Re:

6 Chapter 11



9 Debtors.

10 -------------------------x

11

12 DEPOSITION OF ALAN KAPLAN


14 March 1, 2010

15

16 Reported by:


18 JOB NO. 28619

19

20

21

22

23

24

25


Page 2

12345 March 1, 20106 9:30 a.m.78 Deposition of ALAN KAPLAN, held at the9 offices of Jones Day, LLP, 222 East 41st Street,

10 New York, New York, before Mary F. Bowman, a11 Registered Professional Reporter, Certified12 Realtime Reporter, and Notary Public of the13 State of New York and New Jersey.141516171819202122232425

Page 4

12 APPEARANCES:34 HUGHES, HUBBARD & REED, LLP5 Attorneys for the SIPA Trustee6 One Battery Park Plaza7 New York, New York 10004-14828 BY: CARL MILLS, ESQ.9

10111213141516171819202122232425

Page 3

1

2 APPEARANCES:3

4 JONES DAY, LLP5 Attorneys for Lehman Brothers, Inc.6 222 East 41st Street7 New York, New York 10017-67028 BY: JENNIFER L. DEL MEDICO, ESQ.9

10 BOIES, SCHILLER & FLEXNER, LLP11 Attorneys for Barclays and The Witness12 5301 Wisconsin Ave. NW13 Washington, DC 2001514 BY: JONATHAN SHAW, ESQ.15

16 QUINN, EMANUEL, URQUHART, OLIVER & HEDGES, LLP17 Attorneys for the Creditors Committee18 51 Madison Avenue - 22nd Floor19 New York, New York 1001020 BY: ROBERT DAKIS, ESQ.21

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1 KAPLAN2 3 4 5 6 Q. Did you have other involvement in the7 Fed replacement repo after September 17th?8 A. Certainly anything prior to the9 closing I believe would have been privileged.

10 Q. And I'm not asking for conversations11 or -- just involvement.12 MR. SHAW: Objection to form, vague.13 Q. Did you have any involvement with14 anyone else at Lehman or any other third parties15 with respect to the Fed repo after September16 17th?17 MR. SHAW: By third parties you're18 excluding outside counsel for Barclays, I19 take it?20 MS. DEL MEDICO: Yes.21 A. At least before the closing of the22 transaction, I do not believe so. I mean, it's23 possible -- one possibility is, and I don't24 recall, is, I don't remember whether the25 documents were actually signed on the 17th or

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1 KAPLAN2 there may have been a little more back and forth3 in terms of signing documents after that, but I4 just don't recall.5 Q. After your conversation with6 Mr. Lechner on the 17th, was there any more7 substance to that conversation besides the fact8 that the securities involving the repo would be9 part of the purchase transaction?

10 MR. SHAW: Objection, asked and11 answered.12 A. Not that I recall.

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10 11 12 1314 15 16 Q. Did you have any, besides the meeting17 on September 17 that we just spoke about, did18 you have any other conversations with anyone at19 the Fed about the Fed replacement repo?20 A. I don't recall. It's possible --21 there were no further meetings. There may have22 been a follow-up conference call, I just don't23 recall.24 Q. After this meeting on September 17th,25 did you personally do anything further with

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1 KAPLAN2 regard to the Fed replacement repo?3 A. Can you be more specific?4 Q. Sure, did you, after this meeting on5 September 17th, did you do any further work on6 the Fed replacement repo, including7 conversations with how the repo would work or8 facilitating the repo, anything at all9 regarding --

10 A. I think its privileged.11 MR. SHAW: You can answer yes or no.12 But if it involves a legal work you did for13 Barclays or discussions with Barclays14 personnel, I think that would be privileged.15 A. The answer is yes, but it would be16 privileged.

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10 11 12 13 14 1516 17 18 19 20 21 Q. With respect to this notice of22 termination, do you recall receiving this23 document on or around September 19?24 A. I recall after September 19th,25 probably on the 20th, either learning of a

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1 KAPLAN2 notice of termination or possibly receiving this3 or noticing that I had received it.4 Q. What did you -- did you read the5 document then on September 20th for the first6 time?7 A. I don't recall if I read the document,8 but I understood that a notice of termination9 had been sent with respect to the master

10 repurchase agreement.11 Q. If you didn't read it, how did you12 understand that it had been sent?13 A. I may have read it, I don't recall.14 Q. Did it come to you via e-mail or did15 someone hand it to you, do you recall?16 A. I believe I would have received a17 privileged e-mail.18 Q. If -- so you didn't receive this via19 e-mail like you did in the ordinary course with20 other notices of termination that you would get21 and file in the PST files?22 MR. SHAW: Objection,23 mischaracterizes --24 A. No, I didn't say that. I don't recall25 how I received it. I probably received it by

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1 KAPLAN2 e-mail. Whether I read it or not, I don't3 recall.4 There was a lot going on at the time5 and whether I noticed it right away or after the6 fact and whether I immediately moved it into a7 PST folder, I just can't recall in this case.8 Q. Did someone at Barclays bring it to9 your attention?

10 MR. SHAW: Again, if this, if the11 answer is a question involved with12 privileged communication, please don't13 divulge the details of that.14 A. It would have involved a privileged15 communication.16 17 18 19 20 21 22 23 24 25

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10 11 Q. Did you speak to anyone at Lehman or12 its representatives at Weil Gotshal about the13 notice of termination?14 A. I don't believe so, no.15 16 17 18 19 20 21 22 23 24 25

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1011 12 13 14 15 1617 1819 20 21 22 Q. Are you aware of Section 559 of the23 Bankruptcy Code?24 A. I am.25 Q. What do you know about Section 559 of

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1 KAPLAN2 opinion?3 Q. I am asking his --4 A. I am aware that there is a part of 5595 that talks about excess value, and I don't have6 the exact words in front of me, having to be7 returned to the debtor, yes.8 9

10 11 12 13 14 1516 1718 19 Q. And I understand that you never spoke20 to anyone on the Lehman side of the table,21 including Weil, about Section 559 of the22 Bankruptcy Code, correct?23 A. That's correct.24 25

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1 KAPLAN2 the Bankruptcy Code?3 MR. SHAW: To the extent your4 knowledge of Section 559 of the Bankruptcy5 Code involves legal advice from Barclays'6 counsel, I would caution you not to reveal7 that.8 A. I'm familiar with 559 as dealing with9 safe harbor for repo transactions, repurchase

10 transactions.11 Q. What -- can you describe the safe12 harbor for repo transactions for me?13 MR. SHAW: If you have an14 understanding apart from any legal advice15 and legal analysis, you can give that.16 A. I mean, like other safe harbors, it17 deals with the ability to terminate the18 transactions without having to be concerned19 about the stays and also deals with -- it is a20 safe harbor for preferences and transfers as21 well.22 Q. Do you know what happens to excess23 collateral in a repurchase agreement under24 Section 559?25 MR. SHAW: Are you asking for a legal

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1011 12 Q. At any time, were you part of any13 discussions with Lehman or its representatives14 at Weil Gotshal about paragraph 13 of the15 clarification letter?16 A. No, I was not.17 Q. To your knowledge, was anybody on18 Barclays' side of the table, Barclays or its19 representatives involved in discussions with20 Lehman or its representatives about provisions21 in the clarification letter that address the22 issue of the termination of the repo?23 MR. SHAW: Again, to the extent that24 you -- that any information that you might25 have relates or is a privileged

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1 KAPLAN2 communication, I would caution you not to3 divulge it.4 MS. DEL MEDICO: Even on a yes or no5 answer on that?6 A. I don't have any specific knowledge7 aside from this document you just showed me.

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1 KAPLAN2 INDEX:3 WITNESS EXAM BY: PAGE:4 A. Kaplan Ms. Del Medico 65 Mr. Dakis 51, 706 Mr. Mills 52789

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1 KAPLAN2 3 4 5 6 7 89 ____________________

10 ALAN KAPLAN11 Subscribed and sworn to12 before me this day13 of March, 2010.1415 _______________________16171819202122232425

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1 KAPLAN2 CERTIFICATE3 STATE OF NEW YORK )4 )ss:5 COUNTY OF NEW YORK)6 I, MARY F. BOWMAN, a Registered7 Professional Reporter, Certified Realtime8 Reporter, and Notary Public within and for9 the State of New York, do hereby certify:

10 That ALAN KAPLAN, the witness whose11 deposition is hereinbefore set forth, was12 duly sworn by me and that such deposition is13 a true record of the testimony given by such14 witness.15 I further certify that I am not16 related to any of the parties to this action17 by blood or marriage and that I am in no way18 interested in the outcome of this matter.19 In witness whereof, I have hereunto20 set my hand this 1st day of March, 2010.2122 __________________________


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1 KAPLAN2 * * *ERRATA SHEET* * *3 NAME OF CASE: In Re: Lehman4 DATE OF DEPOSITION: 3/1/105 NAME OF WITNESS: ALAN KAPLAN6 Reason codes:7 1. To clarify the record.








From ___________________ to_________________222324 _______________________

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12 30(b)(6) DEPOSITION OF13 CLEARY GOTTLIEB STEEN & HAMILTON LLP14 by15 VICTOR I. LEWKOW16 New York, New York17 Wednesday, February 10, 201018

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1234 February 10, 20105 10:02 a.m.678 30(b)(6) DEPOSITION OF CLEARY9 GOTTLIEB STEEN & HAMILTON LLP, by VICTOR I.

10 LEWKOW, held at the offices of Cleary11 Gottlieb Steen & Hamilton LLP, 450 Park12 Avenue, New York, New York, pursuant to13 Notice, before MayLeen Cintron, a Registered14 Merit Reporter, Certified Realtime Reporter,15 and Notary Public of the State of New York.16171819202122232425


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1 A P P E A R A N C E S: (Cont'd)23 HUGHES, HUBBARD & REED LLP4 Attorneys for the SIPA Trustee5 One Battery Park Plaza6 New York, New York 10004-14827 BY: WILLIAM R. MAGUIRE, ESQ.8 AMINA HASSAN, ESQ.9

1011 CLEARY GOTTLIEB STEEN & HAMILTON LLP12 Attorneys for the Witness: Victor Lewkow13 One Liberty Plaza14 New York, New York 1000615 BY: BOAZ S. MORAG, ESQ.16 ROBERT P. DAVIS, ESQ.17181920 - - -2122232425


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1 A P P E A R A N C E S:23 JONES DAY LLP4 Attorneys for Debtors - Lehman Brothers, Inc.5 222 East 41st Street6 New York, New York 10017-67027 BY: ROBERT W. GAFFEY, ESQ.8 BRIDGET CRAWFORD, ESQ.9

10 BOIES, SCHILLER & FLEXNER LLP11 Attorneys for Barclays12 5301 Wisconsin Ave., N.W.13 Washington D.C. 2001514 BY: HAMISH HUME, ESQ.151617 QUINN, EMANUEL, URQUHART,18 OLIVER & HEDGES LLP19 Attorneys for the Creditors Committee20 51 Madison Avenue - 22nd Floor21 New York, New York 1001022 BY: JAMES TECCE, ESQ.232425


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1 -Lewkow-2 V I C T O R I. L E W K O W,3 called as a witness, having been duly4 sworn by a Notary Public, was examined5 and testified as follows:

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1 -Lewkow-2 3 Q. So, there are not, I take it,4 particular -- there is not a defined list of5 things you expect to find, that you need to6 see in a transaction in order to qualify as a7 so-called "balance sheet transaction"; is that8 right?9 MR. MORAG: Objection to form.

10 A. I would say that in my experience,11 in the context of buying a business where12 there were a lot of financial assets valued13 and liabilities, the value of which changed14 over -- could change or would change or did15 change over time between signing and closing16 or between if there weren't represented -- a17 representation by the seller as to the value18 as of signing, starting date could be actually19 earlier than the signing of the asset purchase20 agreement.21 If between whatever date a balance22 sheet was represented as of and the closing23 date, the value of the assets and liabilities24 had changed and I would expect as part of a25 balance sheet transaction, for there to be pre


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1 -Lewkow-234 In Paragraph 4 of your Declaration,5 you say, "The transaction was never discussed6 or documented as what might be called a7 'balance sheet' transaction, which would have8 included pre-closing and/or post-closing9 purchase price adjustment provisions relating

10 to a valuation of the transferred assets and11 liabilities".12 Is the term "balance sheet13 transaction" a term of art of some kind?14 MR. MORAG: Object to the form.15 You can answer.16 A. In many private acquisitions as17 opposed to public company acquisitions, there18 are price adjustments tied to an audited19 balance sheet that is prepared as of the20 closing date.21 And I'm not sure if it is a broadly22 used term, but it certainly is what I was23 talking about. So...2425


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1 -Lewkow-2 or post-closing price -- pre or post- closing3 price adjustments.

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1011121314151617 181920212223 Q. Did Cleary Gottlieb play any role24 in the negotiation of the transaction with25 regard to arriving at a valuation of the

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1 -Lewkow-2 assets to be transferred?3 MR. MORAG: Object to the form.4 Vague.5 A. No.


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1 -Lewkow-2 Barclays, was my understanding, that Barclays'3 trading and/or financial folks had been4 provided certain information about the trading5 positions; that it was contemplated that6 Barclays would assume as part of an7 acquisition of the business of substantially8 all of the business.9 And in the course of that, Barclays

10 had -- Barclays people had reached the view11 that there were very significant -- that the12 aggregate carrying value that they had been13 furnished by Lehman was substantially higher14 than Barclays believed was appropriate that15 Monday or Tuesday.16 Q. And by "aggregate carrying value",17 do you mean Lehman's book value?18 A. It's my -- I'm not an accountant,19 as you know. I'm a lawyer. It is my20 understanding that for an entity such as21 Lehman, they are supposed to -- under22 regulatory accounting principles, maybe23 generally accepted accounting principles, I24 don't know. But as a general matter,25 broker-dealers mark their portfolio to market


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1011121314151617181920212223 Q. Can you tell me what you know with24 regard to those discussions?25 A. As I stated in my declaration,


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1 -Lewkow-2 on a daily basis. And I believe that means3 their book value is effectively adjusted each4 day. To the extent that a balance sheet is5 prepared, the balance sheet is prepared based6 on those marks.7 Q. So when you use the phrase8 "aggregate carrying value," were you referring9 to Lehman's books marked to market in that

10 manner?11 MR. MORAG: Object to the form.12 MR. HUME: Objection, asked and13 answered.14 A. I think I've got nothing more to15 say on that.16 Q. What did you mean to say when you17 said "aggregate carrying value"?18 A. The value -- what I hear people19 refer to as "the marks." What they were being20 marked at on the books of Lehman by Lehman.

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10 111213141516171819 20 2122 23 Q. Now, to your knowledge, was the24 document I have before you marked as25 Exhibit 19, a product of the discussions

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1 -Lewkow-2 between Barclays and Lehman traders that3 you're referring to in Paragraph 9 of your4 Declaration?5 MR. MORAG: Object to the form.6 A. No. I -- I wouldn't -- I mean,7 I -- this was a Lehman Brothers document. I8 assume that as --9 To the extent that Lehman Brothers,

10 having listened to Barclays' views as to11 valuation may have changed their marks, as I12 believe they did, it may have reflected those13 judgments by Lehman as to the proper marking14 of assets or liabilities. But that's all.


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1 -Lewkow-2 the 22nd?3 A. No.4 56789

1011121314151617181920212223 Q. Where did the $70 billion come from24 that was put into subsection (d) of the25 definition of "Purchased Assets"?


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10111213141516171819 Q. Do you know if Lehman did, in fact,20 change its marks?21 A. I have no way of knowing that.22 Q. Did you or anyone else from Cleary23 ever ask that question in the week24 beginning -- well, from Tuesday, September25 16th through the closing of the transaction on


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1 -Lewkow-2 A. From Lehman.3 Q. Was it Barclays' understanding at4 the time that that was an accurate estimation5 of the book value of the described assets?6 MR. MORAG: Objection to form.7 A. To my knowledge, it was Barclays'8 understanding that it represented what Lehman9 Brothers -- having considered the discussions

10 I described earlier in terms of what they11 concluded, after hearing Barclays, was the12 proper mark to take on its balance sheet.13 That it reflected Lehman's conclusions.14 Q. Was the term "book value" used for15 a reason in subsection (d) in the definition16 of "Purchased Assets"?17 MR. HUME: Objection. Vague.18 A. Who's -- yeah, whose reason?19 Q. Well, was it supposed to say20 "market value"?21 A. Not all assets on the balance sheet22 have a market value. There are -- it is my23 understanding. Again, I'm not an expert, a24 broker-dealer expert or a market expert or a25 valuation expert, but it is my understanding

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1 -Lewkow-2 that for some positions where there is no3 active market, that other -- other things go4 into how a broker-dealer is supposed to mark5 their -- their valuation from an accounting6 standpoint.7 Q. Was it a considered choice of the8 people who drafted the Asset Purchase9 Agreement to use the phrase "book value"

10 instead of some other phrase such as "market11 value"?12 MR. HUME: Objection. Vague and13 lacks foundation.14 A. Can I have the question read back,15 please?16 (Record read.)17 A. I don't know how to answer that18 question, final question.19 Every -- we tried as a group, Weil20 Gotshal, Simpson Thacher, Sullivan & Cromwell,21 Cleary Gottlieb, tried to do the best we could22 in drafting this Agreement under23 extraordinarily unusual, difficult24 circumstances.25 I do recall that, that this was one


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1 -Lewkow-2 least from what this lawyer believed, the3 lawyer from Weil, understood "book value" to4 mean in the context of financial assets held5 by a broker-dealer.


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1 -Lewkow-2 of those final changes that was added in3 handwriting, if I had the other version of the4 Agreement. And somebody, I believe on5 Lehman's side of the table said, suggested we6 add in words such as -- to categorize that7 what we were talking about were, you know, a8 disfunction of assets. And it was for that9 purpose that it was referenced.

10 And I believe that it was first11 suggested -- and again, I don't know from12 whom, it might have been a Lehman person. It13 might have been one of their lawyers. Said,14 let's say, with a -- you know, with a15 marking -- with marks of 70 billion, or some16 words of that sort.17 And some lawyer -- again, I don't18 know on which side. Because this was all19 being done in group session issue -- said,20 "Well, should we use the word" -- "from a21 legal, instead of saying 'marks', should we22 use the word 'book value'?"23 And that's the word that went in.24 But I don't think people were trying to draw a25 distinction between book value and marks, at


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1 -Lewkow-2 Agreement, supplement in certain respects the3 agreements of the parties stated therein, and4 amend the Asset Purchase Agreement in certain5 respects."6 Q. Now, are there particular portions7 of the Agreement that were amended or are8 there particular portions that were9 supplemented or are there particular portions

10 that were clarified?11 MR. MORAG: Objection to the form.12 MR. HUME: Objection to the form13 and that it calls for an intersection14 of the agreement. And generally15 Barclays will object to the extent you16 ask the witness to give legal17 interpretations of the contract as18 revealing privilege.19 A. The answer is -- the document is20 the document. No one ever tried to say, all21 right, this clause is a supplement; this22 clause is an amendment; this clause is -- they23 are what they are. Certain -- certain things24 did clarify; certain things amended. No25 one -- there was no reason -- there was no


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1011 1213141516171819 20 Q. What was the purpose of the21 Clarification Letter?22 A. The Clarification Letter was, as23 set forth in the opening paragraph, "To24 clarify the intent of the parties with respect25 to certain provisions of the Asset Purchase


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1 -Lewkow-2 effort to allocate into buckets in this3 document.4 Q. Do you recall if the use of the5 word "amend" was a deliberate drafting choice?6 MR. MORAG: Objection.7 MR. GAFFEY: That's a bad question.8 Let me withdraw that question.9 Q. Do you recall if the word "amend"

10 was added at some point during exchanging11 drafts of the Clarification Letter?12 A. I would need to see all the drafts13 to be sure. But my recollection is yes.14 Q. Okay. I'm going to show you the15 draft, so I'm not going to ask you to16 speculate and pinpoint.17 Do you recall any discussions18 between the party, that is between Lehman and19 Barclays or their representatives, about20 adding the word "amend" to the Clarification21 Letter?22 A. I have a vague recollection that23 with the very first draft of the Clarification24 Letter, which was prepared very quickly by25 someone -- and I don't know which side --

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1 -Lewkow-2 after the Asset Purchase Agreement had been3 signed and filed with the Court on Wednesday4 morning, that the original first draft was a5 page or two and it clearly was truly nothing6 other than clarification. And so that the7 first draft did not use the word "amendment."8 At some later point, as things got9 more complicated and things were happening, it

10 became -- there was discussion that we should11 add the word "amend." That is my12 understanding.


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1 -Lewkow-2 don't know. I do have a distinct recollection3 of him describing to the Court at the sale4 hearing that Friday evening that there were5 major changes in the deal.6 So I can't imagine -- I don't want7 to speculate. I do not recall specifically8 whether he was involved in adding the word9 "amend" in that clause.

10 Q. Was the Clarification Letter meant11 to memorialize those major changes in the12 deal?13 MR. MORAG: Object to form.14 A. I'm picking up the Clarification15 Letter. It was made to both supplement,16 clarify and amend the Asset Purchase17 Agreement. And it was intended to be18 consistent with what the Court had been told19 this Friday evening.202122232425 Q. The Clarification Letter,


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101112131415 The question, the issue is what you16 talked about a minute ago --17 A. The word "amendment"?18 Q. Yes. That it became more complex19 and I decided to add the word "amendment,"20 whether Mr. Harvey Miller was involved in21 those discussions.22 A. I don't think -- I don't know what23 Mr. Miller was doing talking internally with24 his colleagues or with his clients. Did he25 participate in the exact wording of that? I


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1 -Lewkow-2 Exhibit 25, sets forth certain changes in the3 definition of "Purchased Assets" from the4 original Asset Purchase Agreement; is that5 correct?6 MR. HUME: Object to the form.7 A. Can I look at --8 Q. Sure.9 A. -- both at the Clarification Letter

10 and the Asset Purchase Agreement?11 Q. Look at whatever you need to look12 at.13 A. Thank you.14 (Witness reviewing document.)15 A. Yes.16 Q. While you were present in court,17 was Judge Peck told about the changes in the18 definition of "Purchased Assets"?19 MR. MORAG: Object to the form.20 A. You can read the transcript as well21 as I can, and I think it speaks for itself.22 I think that what the judge was23 told was about the substantive changes in the24 deal, major changes in the deal that had been25 orally agreed to, is my understanding, by

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1 -Lewkow-2 representatives of Lehman and Barclays in a3 couple of hours preceding the beginning of the4 court hearing.5 So it does not mean that -- as the6 Court was well aware and as the Court noted,7 that he did not have the document. The8 document did not yet exist but, you know,9 major changes were described by Mr. Miller and

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1 -Lewkow-23456 Q. Take a look, if you would,7 Mr. Lewkow at Paragraph 1, and tell me if8 there are changes to the definition of9 "Purchased Assets" affected by the

10 Clarification Letter, changes to the11 definition from the Asset Purchase Agreement?12 MR. MORAG: You're asking him --13 A. Yes.14 MR. MORAG: -- the Clarification15 Letter?16 A. Yes.17 MR. MORAG: The last thing --18 A. The answer is yes. There was a19 change in the definition, that's correct.202122232425


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1 -Lewkow-23 Q. Do you recall when it was that the4 lawyers first learned that assets that had5 been originally described in the long6 positions were, in fact, in the repo? When7 did that happen?8 MR. MORAG: Object to the form.9 A. Yeah, I think -- first of all, I

10 can't answer for all lawyers. That would11 include the Weil Gotshal lawyers and other12 lawyers on behalf of...13 As to Cleary Gottlieb, at some14 point I believe, at least one of my colleagues15 that Thursday had heard that there had been --16 that Barclays had extend -- provided repo17 financing to Barclays. I'm not sure. It is18 my understanding none of the details, we had19 not been involved in that at all. But it was20 mentioned, and we learned more about it on21 Friday and over the weekend.22 But even as -- even as of the Court23 hearing we knew very little about it.2425


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1 -Lewkow-2 extent it would reveal a privilege from3 Barclays.4 MR. GAFFEY: As to when?5 MR. HUME: Well, you assumed6 when --7 MR. GAFFEY: It is attorney --8 MR. HUME: It was terminated. What9 does terminated mean?

10 MR. GAFFEY: It means ended.11 A. It's a legal... If you want to ask12 the question -- can I talk to counsel for13 Barclays and my counsel?14 Q. Sure. Absolutely.15 (Whereupon, a recess was taken16 from 11:49 a.m. to 11:52 a.m.)17 A. Before the break you asked me a18 question about did there come a time of19 learning about the termination of the repo.20 Of course, the repo did terminate,21 as I understand it, when we closed on Monday,22 but I assume that's not what you're asking.23 Q. It is not.24 A. There did come a time over the25 weekend, I don't recall whether it was


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10111213141516171819 Q. The question is: Did there come a20 time when you learned that the Repurchase21 Agreement had been terminated by Barclays?22 A. There came --23 MR. MORAG: Objection to form.24 MR. HUME: I will object and25 instruct you not to answer to the


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1 -Lewkow-2 Saturday or Sunday, where we did learn -- I3 think I was reminded in preparing for the4 deposition, that it was -- we initially5 learned it when we were copied, or not copied6 and then forwarded on an e-mail from Sullivan7 & Cromwell who was co-counsel with us for8 Barclays, and/or to -- to Weil, that there had9 been an inadvertent notice given to Barclays

10 by folks in the -- I don't know who, but11 someone at Barclays had sent a notice of12 termination of the repo at some point, I13 believe late Friday, and that that was done in14 error and should be undone.15 So if that's what you're asking16 about, you've heard what my recollection is.17 Q. It is. Let me show you what's18 previously been marked as Exhibit 27.19 Have you seen that document before,20 sir?21 (Witness reviewing document.)22 A. No, I don't believe I have.23 Q. You learned about the inadvertent24 termination of the repo over the weekend; is25 that right?

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1 -Lewkow-2 A. Yes.3 Q. Was it the Saturday or the Sunday?4 A. I don't know.5 Q. Were you involved in any6 discussion, you or anyone else from Cleary or7 Barclays, involved in any discussions from the8 Lehman folks or Weil Gotshal about the9 inadvertent termination of the repo?

10 A. It is my -- I don't think I11 personally was, but here as a12 30(b)(6) witness --13 Q. You are Cleary Gottlieb, sir.14 A. -- internally. I was perfectly15 happy not knowing in my life.16 It is my understanding that17 following up on the e-mail from Sullivan &18 Cromwell and the like, that the -- that there19 may have been some discussions about, you20 know, implementing this and getting it right21 to -- to -- because it was, as I -- as I was22 told at the time and we were told at the time,23 and as I testified to, it was sent in error.24 But I don't recall any other discussion.25 I'm not aware of any other


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1 -Lewkow-2 don't know the answer to that.3 Q. There is a reference in Paragraph4 13 to the Notice of Termination, do you see5 that?6 A. Yes.7 Q. Is the notice of termination that8 is referred to in Paragraph 13 of the9 Clarification Letter, the notice that we've

10 marked as Exhibit 27?11 A. Well, it says it is a notice of12 termination in Paragraph 13 dated13 September 19. Exhibit 27 that you've shown14 me, that as I testified I do not believe I've15 ever seen, it is dated September 19th. It is16 from Barclays, it is to Lehman, and it says it17 is a notice of termination. So it appears to18 be it is, but that's all I can tell you.19 Q. Was there any discussion between20 the folks on the Barclays side of the table,21 including Cleary, and the folks on the Lehman22 side of the table including Weil Gotshal,23 about whether there were implications under24 the Bankruptcy Code to the fact that the repo25 had been terminated?


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1 -Lewkow-2 discussion that Cleary Gottlieb was aware of3 with the other side on, on this subject.4 Q. That's sort of where I'm leading.5 Let me rephrase the question so you'll know6 what it is I'm looking for here.7 What knowledge does Cleary Gottlieb8 have that Weil Gotshal or Lehman knew about9 the termination of the repo, that it had been

10 terminated?11 A. I believe, as I testified a minute12 ago, that there was an e-mail that Sullivan &13 Cromwell on behalf of Barclays sent to Weil14 Gotshal. And I believe there were some15 follow-up conversations referencing the fact16 that there had been an inadvertent notice that17 had been sent on this subject. Can I look at18 the Clarification Letter?19 Q. Sure. Paragraph 13 is probably20 where you want to go.21 A. Fine.22 Q. The language in Paragraph 13 was23 supplied by Sullivan & Cromwell, correct?24 A. I would have to look at this and25 compare it to the words in the e-mail. I


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1 -Lewkow-2 A. It is my understanding that to the3 best of Cleary Gottlieb's knowledge, no.4 Q. Did Cleary Gottlieb have5 communications with any other person or entity6 outside of your client, outside of Barclays7 and Cleary, about Section 559 of the8 Bankruptcy Code in connection with the9 termination of the repo?

10 MR. HUME: Outside of any11 privilege.12 MR. GAFFEY: Outside of any13 privilege, yes.14 A. To the best of my knowledge, no,15 subject to this caveat. You will be taking my16 partner's Ed Rosen's deposition. He was17 involved in the discussions with DTC and other18 clearance -- clearing entities. And since he19 was going to be the 30(b)(6) witness on those20 discussions, I have not consulted him. So as21 to whether or not there was anything on that22 point, I do not know the answer on behalf of23 Cleary Gottlieb. Subject to that, the answer24 is no.25 Q. Were there discussions about 559

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1 -Lewkow-2 with any other self-regulating organizations3 or governmental agency concerning Section 5594 of the Bankruptcy Code.5 A. Not to my knowledge.6 Q. Mr. Lewkow, I'm going to show7 you --8 A. This is starting to look like my9 desk at the office.

10 Q. I'm trying to make you feel at11 home. Let me add this to the pile there and12 show you what previously was marked as Exhibit13 579B, a Declaration of Alan Kaplan, deputy14 general counsel of Barclays, that's been15 submitted in Barclays's opposition papers on16 Rule 60. Have you seen this before?17 A. I can't remember if someone showed18 me this in the last few days or not.19 Q. Take a minute if you would --20 A. I wouldn't swear that I haven't.21 But if so, I didn't read it very careful.22 Q. There's a statement that Mr. Kaplan23 makes that I want to see if you had any24 knowledge about. And it's in Paragraph 4 of25 his declaration. He is referring to the


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1 -Lewkow-2 discussed between the fact that this change3 needed to be made, that it was sent in error.4 It was discussed at least briefly between the5 Barclays side, including Cleary and Sullivan &6 Cromwell, and the Lehman side including Weil,7 yes.8 Q. Again, does it refresh your9 recollection, where you read Mr. Kaplan

10 talking about "correcting an error," does it11 refresh your recollection about whether there12 were any discussions between the Barclays side13 of the table including Cleary, and the Lehman14 side of the table including Weil, about15 implications into the Bankruptcy Code from the16 termination?17 A. I answered that question. To the18 best of my knowledge, there were no such19 discussions.202122232425


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1 -Lewkow-2 notice going out erroneously, I'm3 paraphrasing. Then he says, "The parties4 corrected that error in Paragraph 13 of the5 Clarification Letter." Do you see that?6 A. Yes, let me read all of7 Paragraph 4, if I may?8 Q. Sure.9 (Witness reviewing document.)

10 A. Remind me of the question?11 Q. I think the question was: Do you12 see that? But --13 A. I do.14 Q. Okay. When Mr. Kaplan says "the15 parties", plural, "The parties corrected the16 problem with Paragraph 13", I show you that to17 see if it refreshes your recollection in any18 way whether there were any discussions between19 the parties, that is between Barclays and its20 representatives and Lehman and its21 representative, about the problem created by22 the termination of the repo?23 MR. MORAG: Objection to the form.24 A. I don't know what you mean by the25 "problem created." But I believe it was


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101112131415 Q. Was there any discussion with16 anyone outside of the circle of Cleary and17 Barclays to the effect that the Bankruptcy18 Code would require the financing haircut in19 the repo to be paid back into the estate over20 and above the amount that Barclays had21 advanced in the Repurchase Agreement?22 A. Not to my knowledge.23 MR. MORAG: Objection to24 characterization.25 Q. Do you know if anyone at Cleary had

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1 -Lewkow-2 communications with anyone outside of3 privilege, that is anyone outside of4 communications with your client concerning5 whether anyone would seek to stay the6 application of 559 of the Bankruptcy Code in7 connection with the termination of the repo?8 A. Not to my knowledge.


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1 -Lewkow-2345 Q. Do you know whether there's a6 reason Sullivan & Cromwell drafted the7 language in Paragraph 13?8 MR. HUME: I instructed the witness9 not to answer that. To the extent it

10 reveals privilege, I don't know how you11 can answer it otherwise.12 THE WITNESS: I actually think I13 can.14 MR. HUME: If you can, go ahead.15 A. We had, as I testified earlier,16 basically nothing to do with the creation, the17 documentation, the implementation of the repo.18 I don't know whether Sullivan & Cromwell did19 or not, but we had not. And so I'm not20 surprised that we had nothing to do with21 follow-ups with regard to that.


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1 -Lewkow-234 Q. Here we go. Second sentence of5 Paragraph 11, "Weil had circulated a revised6 draft of the Clarification Letter by e-mail7 during the sale hearing". Do you recall that?8 A. Yes. That's the one that I9 mentioned. It's this draft that arrived while

10 I was in court, correct.11 Q. That's this draft marked as12 Exhibit 35?13 A. Correct.14 Q. Did anyone in the court have any15 discussions about the draft that was16 circulated by e-mail?17 A. No.18 Q. So other than this statement in19 your Declaration that was circulated by20 e-mail, do you have anything you can add as to21 what anybody did about that fact? Anybody22 read it? Talk about it?23 A. No one -- no one had more than a24 BlackBerry, no copies were ever delivered, to25 my knowledge, certainly not to Cleary Gottlieb

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1 -Lewkow-2 or Barclays in the courtroom. Whether3 somebody from Weil had them handed a draft or4 not? I don't know. But certainly no one on5 our side saw them in the courtroom.


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10111213141516171819202122232425 Q. As you sat through the sale hearing


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1 -Lewkow-2 moving target we had, as I told you in your3 last question, really hadn't had any4 consultation as to what exactly she and5 Mr. Miller were going to tell the Court.6 That having been said, as I sat7 there, I am, as a member of the Bar, I am -- I8 do have obligations and certainly if I had9 thought that I heard something that was

10 inconsistent with my understanding of the deal11 or omitted information that was obvious that12 should have been -- would make the description13 of what the judge heard -- and by "description14 of what the judge heard," I include everything15 that he heard Wednesday and everything that16 was in the Asset Purchase Agreement that he17 had heard before.18 If I thought he was being misled, I19 obviously would have, as was Mr. Granfield who20 was my partner who I was sitting next to, we21 would have either, you know, addressed the22 Court directly or would have talked to Weil23 Gotshal and asked them to make appropriate24 other statements to the Court.25


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1 -Lewkow-2 and heard the presentations to the Court from3 the various lawyers who spoke to the judge,4 was Cleary and Barclays's comfortable that the5 aspect of the deal that had been discussed in6 that session prior to the sale hearing were7 accurately disclosed to the judge?8 MR. MORAG: Object to the form.9 Certainly you speak to Cleary. As to

10 Barclays, I'm not sure if that calls11 for a privilege conversation.12 MR. GAFFEY: Let me just ask as to13 Cleary. That's a good point.14 A. As was my understanding was,15 typical the debtor's counsel on a sale would16 normally be the ones who take the -- make the17 presentation to the Court.18 THE REPORTER: Can I ask you to19 please speak up? Thank you.20 THE WITNESS: I'll try.21 A. As typical, Weil as counsel for the22 debtor was making the presentation. Maybe in23 other context people would have seen a draft24 of what Lori Fife was going to say or the25 like. But certainly, since it was such a


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1011121314151617181920212223 Q. At the time that you had the24 conversation with Mr. Klein and Ms. Fife, was25 it at that point still within the

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1 -Lewkow-2 contemplation of the parties that the3 Clarification Letter would be submitted to the4 Court?5 A. Well, we -- I don't -- the -- it6 had been the contemplation on Wednesday and7 Thursday, and the goal had been to, as I8 testified earlier, to give the Court, to9 give -- to have that ready to give the judge.

10 It was also the intention at that stage to try11 to close Friday evening.12 And on that sort of scenario, if,13 in fact, you were there, it would have been14 probably possible, one would have hoped to15 have had a Clarification Letter that one could16 have given to the Court.17 It was clear to me, but I don't18 recall that given what had changed and given19 that there was a draft that had been served up20 while we were in court, that -- given that it21 showed up when it did, I was dubious even22 before I saw it and before I talked to my23 colleagues as to whether it did or didn't24 reflect those discussions given the timing of25 it.


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1 -Lewkow-2 which -- and this would have been late Sunday3 night, early hours of Monday morning. I don't4 know. But it was very late, very late in the5 game. It might have even been Monday.6 In fact, it might have been Monday7 morning, you know, 5:00, 6:00, 7:00, just8 shortly before we closed as I think about it.9 I don't know when it was. But it was late.

10 It wasn't Saturday. It wasn't Sunday morning.11 It wasn't even Sunday afternoon. And we were12 very close to, you know, finish. The big13 issues that people were dealing with were DTC14 and J.P. Morgan and those sorts of issues were15 really the big issues that people were facing.16 But very late in the process,17 Harvey Miller saying to a group of -- you18 know, again, I don't know how many other -- it19 was a very fluid group of people who would be20 sitting in what room at what time that21 weekend. But there were a number of other22 Weil people and Harvey Miller and me. I don't23 remember whether any of my colleagues were in24 the room with me.25 And Harvey looked at the assembled


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1 -Lewkow-2 So to me, it was, it would have3 been shocking if before the Court could have4 approved it, whether we would have had a final5 Clarification Letter that we could have6 provided the Court.7 Q. By the end of the sale hearing, no8 Clarification Letter had been finalized and9 everybody let to continue their work over the

10 weekend. Was there a point during the weekend11 when there were conversations between Barclays12 on the one hand and Lehman on the other13 including their representatives, about14 bringing the Clarification Letter to the15 judge?16 MR. MORAG: Objection to the form.17 You can answer.18 A. What I recall, and to me the19 Clarification Letter was -- it was getting20 close to being signed. I have a vague21 recollection, I do have a recollection of22 sitting in the room -- I did a lot of sitting23 in the rooms -- with a number of Weil Gotshal24 lawyers, including Harvey Miller, including25 one or more of his corporate colleagues in


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1 -Lewkow-2 group and said something like, Does anyone3 think that we have done anything inconsistent4 with what we've told the Court and have to5 bring this -- go back to court? Or something6 like that. I don't remember the words. I'm7 totally paraphrasing.8 My recollection is, I've read9 Mr. Miller's deposition transcript, and he

10 does not mention who -- he mentions a11 conversation which is, I think, more or less12 consistent with my recollection, but he13 doesn't mention that anyone from Cleary14 Gottlieb, like me, was there.15 But -- and he may have had more16 than one, so I have no way of knowing if it's17 the same conversation.18 But I do recall that. And he19 looked around the room and nobody said20 anything. It was mostly people on his side.21 So that's the one that -- you know, in22 connection with the finalization of the23 Clarification Letter, that conversation took24 place.25 Q. Were any of your bankruptcy

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1 -Lewkow-2 partners present during this conversation?3 A. I do not believe so.


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10111213 141516 ______________________17 VICTOR I. LEWKOW18192021 Subscribed and sworn to before me,22 this ____ day ______________ of 2010.2324 ________________________________25 Notary Public


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1 ------------------I N D E X------------------2 WITNESS EXAMINATION BY PAGE3 V. LEWKOW MR. GAFFEY 54 MR. MAGUIRE 1605 MR. HUME 22667 DIRECTIONS: PAGE 79, 134, 1858 MOTIONS: [None]9 REQUEST: [None]

1011 -----------------EXHIBITS--------------------12 EXHIBIT FOR I.D.13 Exhibit 613A 614 Declaration of Victor Lewkow1516 Exhibit 614A 13517 Letter from S&C, CGSH18 00020701-207141920 Exhibit, 615A 19521 2PP 9/18/08 e-mail from J.22 Potenciano to distribution re:23 Preliminary 15c3-3 reserve lock-up24 as of 9/17/0825

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1 -----------------EXHIBITS--------------------2 [previously marked]3 EXHIBIT FOR I.D.4 Exhibit 1 295 Exhibit 19 316 Exhibit 518 457 Exhibit 25 478 Exhibit 24 589 Exhibit 27 69

10 Exhibit 579B 7411 exhibit 581B 9212 Exhibit 28 9313 Exhibit 29 9314 Exhibit 30 9315 Exhibit 31 9316 Exhibit 32 9317 Exhibit 33 9318 Exhibit 34 9319 Exhibit 35 9320 Exhibit 36 9321 Exhibit 37 9322 Exhibit 34 9523 Exhibit 451 20824 Exhibit 49 21025 - - -


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Dep. Date: February 10, 20103 Deponent: Cleary Gottlieb | Victor I. Lewkow4 Pg. Ln. Now Reads Should Read Reason

___ ___ ______________ _______________ _____5 ___ ___ ______________ _______________ _____6 ___ ___ ______________ _______________ _____7 ___ ___ ______________ _______________ _____8 ___ ___ ______________ _______________ _____9 ___ ___ ______________ _______________ _____

10 ___ ___ ______________ _______________ _____11 ___ ___ ______________ _______________ _____12 ___ ___ ______________ _______________ _____13 ___ ___ ______________ _______________ _____14 ___ ___ ______________ _______________ _____15 ___ ___ ______________ _______________ _____16 ___ ___ ______________ _______________ _____17 ___ ___ ______________ _______________ _____18 ___ ___ ______________ _______________ _____1920 ________________________21 VICTOR I. LEWKOW22




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1 C E R T I F I C A T E23 STATE OF NEW YORK )4 ) ss.:5 COUNTY OF KINGS )6 I, MAYLEEN CINTRON, a Registered7 Merit Reporter, Certified Realtime8 Reporter and Notary Public within and9 for the State of New York, do hereby

10 certify:11 That VICTOR I. LEWKOW, the witness12 whose deposition is hereinbefore set13 forth, was duly sworn by me and that14 such deposition is a true record of the15 testimony given by such witness.16 I further certify that I am not17 related to any of the parties to this18 action by blood or marriage; and that I19 am in no way interested in the outcome20 of this matter.21 IN WITNESS WHEREOF, I have hereunto set22 my hand this 10th day of February, 2010.2324 ---------------------------25 MAYLEEN CINTRON, RMR, CRR

A. 157


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4 ----------------------x

5 In Re:

6 Chapter 11


8 HOLDINGS, INC., et al., (Jointly Administered)

9

Debtors.

10

-----------------------x

11

12

13

14 DEPOSITION OF MARTY MALLOY


16 March 1, 2010

17

18

19

20

21

22

23 Reported by:

24 KATHY S. KLEPFER, RMR, RPR, CRR, CLR

25 JOB NO. 28684


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12 March 1, 20103 9:43 A.M.45 Deposition of MARTY MALLOY,6 held at the law offices of Jones Day,7 LLP, 222 East 41st Street, LLP, New8 York, New York, before Kathy S. Klepfer,9 a Registered Professional Reporter,

10 Registered Merit Reporter, Certified11 Realtime Reporter, Certified Livenote12 Reporter, and Notary Public of the State13 of New York.141516171819202122232425

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123 A P P E A R A N C E S: (Cont'd.)45 HUGHES, HUBBARD & REED, LLP6 Attorneys for the SIPA Trustee7 One Battery Park Plaza8 New York, New York 10004-14829 BY: FARA TABATABAI, ESQ.

10111213141516171819202122232425

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1

2 A P P E A R A N C E S:3

4 JONES DAY, LLP5 Attorneys for Lehman Brothers, Inc.6 222 East 41st Street7 New York, New York 10017-67028 BY: ROBERT W. GAFFEY, ESQ.9

10 BOIES, SCHILLER & FLEXNER, LLP11 Attorneys for Barclays Capital12 333 Main Street13 Armonk, New York 1050414 BY: CHRISTOPHER GREEN, ESQ.15

16 QUINN, EMANUEL, URQUHART, OLIVER & HEDGES, LLP17 Attorneys for the Creditors Committee18 51 Madison Avenue, 22nd Floor19 New York, New York 1001020 BY: JAMES C. TECCE, ESQ.21

22

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1 M. Malloy2 A. We had received BONY documents during3 that previous day in order to look at the4 valuations, and then I called the collateral5 operations managers those Fridays to get the6 latest information.7 Q. So when you prepared 144A, you8 extracted figures from the BONY document, as you9 say in your declaration, but also you extracted

10 relevant figures from your verbal communications11 with others?12 MR. GREEN: Object.13 Q. Correct?14 A. Correct.15 MR. GREEN: Object to the form.16 Q. And the verbal communication that you17 had with others, did they give you information18 that was different from that available to you in19 the BONY document you referring to in your20 declaration?21 MR. GREEN: Object to the form.22 Do you remember?23 THE WITNESS: Well, yes, because the24 collateral had changed. We got additional25 collateral in on that Friday.

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1 M. Malloy2 Q. You say in paragraph 3, "Rather, I was3 simply reporting to Mr. LaRocca the nominal4 value BONY had assigned to the collateral it had5 received in connection with the September 18,6 2008 repo transaction."7 Do you see that sentence?8 A. I do.9 Q. I know everybody was busy that week,

10 but was that the purpose of your task in11 preparing 144A, to give that information to Mr.12 LaRocca?13 MR. GREEN: Object to the form.14 A. Yes, it was. The purpose of this was15 to see how much additional collateral we got in16 that Friday morning because of the shortfall the17 Thursday night. That was the purpose of the18 e-mail.19 Q. And in the next sentence of paragraph20 3, you say you were "referring to a BONY21 document" that you had received "shortly22 before." Do you see that?23 A. Yes.24 Q. What was the BONY document you were25 referring to in your declaration?

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1 M. Malloy2 Q. So in paragraph 3 of your declaration3 where you say, "Referring to a BONY document I4 had received shortly before, I extracted the5 relevant figures and performed some mathematical6 calculations adding up the numbers provided by7 BONY and subtracting the $45 million that8 Barclays had advanced," in addition to what you9 described there, the calculations you did were

10 also dependent on other information; is that11 right?12 MR. GREEN: Object to the form.13 A. Specifically, I started with the14 valuations from the Thursday night.15 Q. Yes.16 A. And then updated it with the Friday's17 figures, the BONY statements from the Thursday18 night which we had received, which was a day19 old, and then the Friday valuations.20 Q. And the Friday valuations you21 understood also to be derived from BONY22 valuations, correct?23 A. Yes.24 Q. They were not the result of any25 internal valuation done by Barclays personnel?

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1 M. Malloy2 A. No.3 Q. So the calculations that you prepared4 in Exhibit 144A derive entirely from BONY's5 marks, correct?6 A. That is correct.7 Q. And you took the information you had8 about the BONY marks and you put together a9 calculation of what you describe in your e-mail

10 as excess collateral; is that right?11 MR. GREEN: Object to the form.12 A. In the e-mail, yes.13 Q. And the excess collateral, the number14 on paragraph 144A is 7.19; that's billions,15 correct?16 A. That number is in billions.17 Q. And so the calculations that you18 performed or the calculations you put together19 based on the BONY marks indicated there was20 excess collateral of 7.19 billion in the repo,21 correct?22 MR. GREEN: Object to the form.23 A. Based on the BONY marks, but the other24 issue that we had is none of this collateral was25 reconciled, so this was the best estimate that

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1 M. Malloy2 3 45 6 78 9

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1 M. Malloy2 we had at that point in time.3 Q. I would be grateful if I could just4 have an answer to the question I actually asked,5 which is the calculations that you put in6 Exhibit 144A were based solely on BONY marks,7 correct?8 A. Correct.9 Q. And the calculations you did in 144A

10 based solely on BONY markets indicated excess11 collateral of 7.19 billion, correct?12 MR. GREEN: Object to the form.13 A. Yes.

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10 11 Q. Are you comfortable that your e-mail12 accurately depicts the values that were drawn13 from the BONY information that you had?14 MR. GREEN: Object to the form.15 Q. You know what, that question is just16 way too complicated.17 Were you comfortable that your e-mail18 was accurate when you sent it?19 MR. GREEN: Object to the form.20 A. As accurate as this e-mail could be at21 12 o'clock on that Friday with collateral22 moving, yes.23 2425

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1 M. Malloy2 345 6 7 8 9

10 11 12 13 14 15161718 ____________________

MARTY MALLOY1920 Subscribed and sworn to

before me this day21 of 2010.22

_______________________232425

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1 M. Malloy2 INDEX3 TESTIMONY OF M. MALLOY: PAGE4 Examination by Mr. Gaffey ..................... 556 EXHIBITS: PAGE7 Exhibit 658C, Declaration of Marty Malloy 589 REQUESTS FOR PRODUCTION:

10 Page 16, Line 1111 Page 24, Line 181213 INFORMATION TO BE PROVIDED:14 Page 13, Line 21516171819202122232425

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1 M. Malloy2 CERTIFICATE3 STATE OF NEW YORK )

: ss4 COUNTY OF NEW YORK)5 I, Kathy S. Klepfer, a Registered6 Merit Reporter and Notary Public within and7 for the State of New York, do hereby8 certify:9 That MARTY MALLOY, the witness whose

10 deposition is herein before set forth, was11 duly sworn by me and that such deposition is12 a true record of the testimony given by such13 witness.14 I further certify that I am not15 related to any of the parties to this action16 by blood or marriage and that I am in no way17 interested in the outcome of this matter.18 I further certify that neither the19 deponent nor a party requested a review of20 the transcript pursuant to Federal Rule of21 Civil Procedure 30(e) before the deposition22 was completed.23 In witness whereof, I have hereunto24 set my hand this 1st day of March, 2010.

-------------------------------25 KATHY S. KLEPFER, RPR, RMR, CRR, CLR

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1 M. Malloy2 NAME OF CASE: In re: Lehman Brothers3 DATE OF DEPOSITION: March 1, 20104 NAME OF WITNESS: Marty Malloy5 Reason Codes:6 1. To clarify the record.

2. To conform to the facts.7 3. To correct transcription errors.8 Page ______ Line ______ Reason ______

From _____________________ to _____________________9

Page ______ Line ______ Reason ______10 From _____________________ to _____________________11 Page ______ Line ______ Reason ______

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From _____________________ to _____________________21


From _____________________ to _____________________2425 __________________________

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)7 Debtors. )

-----------------------)8

9

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13 DEPOSITION OF PROF. PAUL PFLEIDERER14 New York, New York15 Tuesday, February 23, 201016

17

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21

22


2 (Pages 2 to 5)


Page 2

123 February 20, 20104 9:13 a.m.567 DEPOSITION OF PROF. PAUL8 PFLEIDERER, an expert witness, held at the9 offices of Jones Day LLP, 222 East 41st

10 Street, New York, New York, pursuant to11 Notice, before MayLeen Cintron, a Registered12 Merit Reporter, Certified Realtime Reporter,13 and Notary Public of the State of New York.141516171819202122232425


Page 4

1 A P P E A R A N C E S: (Cont'd)23 HUGHES, HUBBARD & REED LLP4 Attorneys for the SIPA Trustee5 One Battery Park Plaza6 New York, New York 10004-14827 BY: WILLIAM R. MAGUIRE, ESQ.8 FARA TABATABAI, ESQ. [as noted]9

1011 ALSO PRESENT:12 DR. MARC VELLRATH, Finance Scholars Group13 RAJESH ANKALKOT, Alvarez & Marsal, Inc.1415 - - -16171819202122232425


Page 3

1 A P P E A R A N C E S:23 JONES DAY LLP4 Attorneys for Debtors - Lehman Brothers, Inc.5 222 East 41st Street6 New York, New York 10017-67027 BY: JAYANT W. TAMBE, ESQ.8 KELLY CARRERO, ESQ.9 XOCHITL STROHBEHN, ESQ.

10 ROBERT W. GAFFEY, ESQ. [as noted]111213 BOIES, SCHILLER & FLEXNER LLP14 Attorneys for Barclays15 5301 Wisconsin Ave., N.W.16 Washington D.C. 2001517 BY: JONATHAN M. SHAW, ESQ.181920 QUINN, EMANUEL, URQUHART,21 OLIVER & HEDGES LLP22 Attorneys for the Creditors Committee23 51 Madison Avenue - 22nd Floor24 New York, New York 1001025 BY: ROBERT K. DAKIS, ESQ.


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1 - P. Pfleiderer-23456 78 Q. And once you combine the super set9 of those, now there is something a little more

10 than 23 percent of the total fair value of the11 repo collateral using Barclays' valuation for12 which you don't have Bloomberg or Capital IQ13 prices; is that right?14 A. That's correct.15 Q. So for more than three-quarters,16 you do?17 A. For 72 percent.18 Q. 72 percent? I'm sorry about my19 math. We're trying to add it to 100 percent,20 right?21 A. I'm sorry. I'm sorry. I was22 looking at the wrong number. 77 percent.23 Q. So more than three-quarters?24 A. Yes.25


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1 - P. Pfleiderer-2 Q. Are there any particular valuations3 that Barclays has done that you would say you4 disagree with or have you not made any such5 determination?6 MR. SHAW: Asked and answered.7 A. I haven't -- I haven't gone and8 said here's a CUSIP that I would disagree with9 because that wasn't the process. I looked at

10 aggregates, I looked at marks that were being11 placed by BoNY and the adjustments that were12 made and found that those were reasonable13 estimates of what could be achieved in an14 orderly exit. And that's my conclusion.


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1 ------------------I N D E X------------------2 WITNESS EXAMINATION BY PAGE3 PROF. PFLEIDERER MR. TAMBE 54 MS. TABATABAI 3245 MR. DAKIS 33867 -----------------EXHIBITS--------------------8 EXHIBIT FOR I.D.9 Exhibit 633-A 6

10 Expert report of Professor Paul11 Pfleiderer - Volume I1213 Exhibit 634-A 714 Expert report of Professor Paul15 Pfleiderer - Vol II1617 Exhibit 635-A 718 2/22/10 letter to Jones Day from19 Boies Schiller with attachment2021 Exhibit 636-A 722 2/22/10 e-mail to K. Carrero from23 Davenport with attachments2425


Page 351

1 - P. Pfleiderer-23 45 6 7 .8 9

10 11 12 13 14 (Time noted: 7:34 p.m.)151617 ______________________18 PROF. PAUL PFLEIDERER192021 Subscribed and sworn to before me,22 this ____ day ______________ of 2010.2324 ________________________________25 Notary Public


Page 353

1 -----------------EXHIBITS--------------------2 EXHIBIT FOR I.D.3 Exhibit 637-A 74 2/10/10 e-mail to K. Carrero56 Exhibit 638-A 607 Appendix Two, list of documents8 and other materials reviewed and9 considered

1011 Exhibit 639-A 6512 BCI Exhibit 346, declaration of13 Paul Pfleiderer1415 Exhibit 640-A 7316 2/6/2010 letter to Jones Day from17 Boise Schiller1819 Exhibit 641-A 20020 E-mail re: Acquisition balance21 sheet, BCI-EX-(s)-00213990 with22 attachments232425

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1 -----------------EXHIBITS--------------------2 EXHIBIT FOR I.D.3 Exhibit 642-A 2454 Agency mortgages, unsupported or5 excluded file type with attached6 spreadsheets, BCI-EX-0029731778 Exhibit 643-A 2479 2/2/09 memo from PwC to Richard

10 Landreman, PwC-BarCapWP_000233271112 Exhibit 644-A 28713 E-mail from Michael McGarvey Re:14 Here's the summary from the 12th,15 BCI-EX-(S)-00213948-51 with16 attachments1718 Exhibit 645-A 30419 8/18/08 e-mail Re: Balance sheet20 iterations,21 BCI-EX-(S)-00213926-393622232425


Page 356

1 C E R T I F I C A T E2 STATE OF NEW YORK )3 ) ss.:4 COUNTY OF KINGS )5 I, MAYLEEN CINTRON, a Registered6 Merit Reporter, Certified Realtime7 Reporter and Notary Public within and8 for the State of New York, do hereby9 certify:

10 That PROF. PAUL PFLEIDERER, the11 witness whose deposition is12 hereinbefore set forth, was duly sworn13 by me and that such deposition is a14 true record of the testimony given by15 such witness.16 I further certify that I am not17 related to any of the parties to this18 action by blood or marriage; and that I19 am in no way interested in the outcome20 of this matter.21 IN WITNESS WHEREOF, I have hereunto set22 my hand this 23rd day of February 2010.2324 ---------------------------25 MAYLEEN CINTRON, RMR, CRR


Page 355

1 -----------------EXHIBITS--------------------2 EXHIBIT FOR I.D.3 Exhibit 646-A 3124 PwC Review of Barclays capital5 price testing methodology,6 PwC-BarCapWP_00022935-948 with7 attachments89

10 -----------------EXHIBITS--------------------11 [previously marked]12 EXHIBIT FOR I.D.13 Exhibit 533-A 23514 Exhibit 19 28615 Exhibit 200 294161718 - - -19202122232425


Page 357


Dep. Date: February 23, 20103 Deponent: Prof. Paul Pfleiderer4 Pg. Ln. Now Reads Should Read Reason

___ ___ ______________ _______________ _____5 ___ ___ ______________ _______________ _____6 ___ ___ ______________ _______________ _____7 ___ ___ ______________ _______________ _____8 ___ ___ ______________ _______________ _____9 ___ ___ ______________ _______________ _____

10 ___ ___ ______________ _______________ _____11 ___ ___ ______________ _______________ _____12 ___ ___ ______________ _______________ _____13 ___ ___ ______________ _______________ _____14 ___ ___ ______________ _______________ _____15 ___ ___ ______________ _______________ _____16 ___ ___ ______________ _______________ _____17 ___ ___ ______________ _______________ _____18 ___ ___ ______________ _______________ _____1920 ________________________21 PROF. PAUL PFLEIDERER22



A. 159


Page 1

1



4 ------------------------x

5 In Re:

6 Chapter 11



9 Debtors.

10 -------------------------x

11

12 DEPOSITION OF EDWARD J. ROSEN


14 February 19, 2010

15

16 Reported by:


18 JOB NO. 28461

19

20

21

22

23

24

25

2 (Pages 2 to 5)


Page 2

12345 February 19, 20106 9:35 a.m.78 Deposition of EDWARD J. ROSEN, held at9 the offices of Cleary, Gottlieb, Steen &

10 Hamilton, LLP, One Liberty Plaza, New York, New11 York, before Mary F. Bowman, a Registered12 Professional Reporter, Certified Realtime13 Reporter, and Notary Public of the State of New14 York and New Jersey.1516171819202122232425


Page 4

12 APPEARANCES:34 HUGHES, HUBBARD & REED, LLP5 Attorneys for the SIPA Trustee6 One Battery Park Plaza7 New York, New York 10004-14828 BY: WILLIAM R. MAGUIRE, ESQ.9 AMINA HASSAN, ESQ.

1011 CLEARY, GOTTLIEB, STERN & HAMILTON, LLP12 Attorneys for the witness13 One Liberty Plaza14 New York, New York 1000615 BY: BOAZ S. MORAG, ESQ.16 ROBERT P. DAVIS, ESQ.171819202122232425


Page 3

1

2 APPEARANCES:3

4 JONES DAY, LLP5 Attorneys for Lehman Brothers, Inc.6 222 East 41st Street7 New York, New York 10017-67028 BY: ROBERT W. GAFFEY, ESQ.9

10

11 BOIES, SCHILLER & FLEXNER, LLP12 Attorneys for Barclays and The Witness13 5301 Wisconsin Avenue, NW - Suite 80014 Washington DC 2001515 BY: HAMISH HUME, ESQ.16

17

18 QUINN, EMANUEL, URQUHART, OLIVER & HEDGES, LLP19 Attorneys for the Creditors Committee20 51 Madison Avenue - 22nd Floor21 New York, New York 1001022 BY: ROBERT DAKIS, ESQ.23

24

25


Page 5



54 (Pages 210 to 213)


Page 210

1 ROSEN


Page 212

1 ROSEN2 order, and then we asked SIPC and, I guess it3 was Mike Macchiaroli now that I see this, to4 confirm that they wouldn't seek such a stay.5 Q. I can't tell from the e-mail address6 with whom or what is Josephine Wang affiliated.7 A. You can't tell that. I think she is8 in the legal department at SIPC.9 Q. And you say in this e-mail to

10 Josephine Wang and Steven Sharbeck, Mike11 Macchiaroli, "Below is the language we believe12 to be necessary to ensure that the order is13 sufficiently broad to cover the relevant14 Barclays Capital transactions."15 Do you see that?16 A. Yes.17 Q. And below that is some proposed18 language and below that is a note that says,19 "Mike, I am trying to place us in the document,20 are you with me?"21 Where did the particular language set22 off in italics come from, beginning, "Exercise23 of any rights," and ending "September 24, 2008"?24 A. Probably from my colleague, Sandra25 Rocks.


Page 211

1 ROSEN2 3 4 5 67 Q. OK. I would like to show you -- let's8 mark this as our next exhibit.9 (Exhibit 631, document Bates stamped

10 BCI-EX(S) 201894 through 95 marked for11 identification, as of this date.)12 Q. The document I have put before you13 Mr. Rosen marked as Exhibit 631 bears Bates14 number BCI-EX(S) 00201894 through 895.15 Have you seen the document before?16 A. Again, not parsing every word, but it17 looks like an e-mail that I sent.18 Q. And you'll see it is an e-mail from19 you to Josephine Wang?20 A. Yes.21 Q. I can't --22 A. This is what I was referring to --23 Q. It is?24 A. -- earlier in terms of the sort of the25 clarification of the language included in the


Page 213

1 ROSEN2 Q. And was this particular language shown3 to or discussed with, to your knowledge, anybody4 on the Lehman side of the table, including its5 business people or representatives?6 A. I think that certainly they would have7 seen the order in the proposed sale -- the sale8 order.9 Q. Well, you are a bit ahead of me. I

10 guess I should have asked that. The order that11 you refer to, is that the sale order?12 A. Yes.13 Q. Do you know if this language wound up14 in the sale order?15 A. I would have to check. I believe so,16 but I would have to check to confirm.17 Q. And in the language that you proposed18 in this e-mail, there is a reference to section19 559 of the Bankruptcy Code. Do you see that?20 A. Yes.21 Q. Were you familiar with the terms of22 Section 559 of the Bankruptcy Code when you23 proposed this language to the Section and SIPC?24 A. No, I was the transmitter.25 Q. Do you know if anyone at -- on the

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Page 214

1 ROSEN2 Barclays side of the table, including its3 representatives, spoke to anyone on the Lehman4 side of the table, including its representatives5 about Section 559 of the Bankruptcy Code?6 A. I don't have a specific recollection7 of that.8 WITNESS' ATTORNEY: Mr. Gaffey, let me9 state for the record, for what it's worth,

10 the language, the italicized language says,11 "The order that the stays set forth above12 shall not apply to," and I just am not sure13 whether or not that really is referring to14 the sale order as opposed to some other15 order.16 MR. GAFFEY: Neither am I. That's why17 I asked the question.18 Q. Does what your counsel has to say19 refresh your recollection?20 MR. HUME: I think it is the SIPC21 order.22 A. Hang on a second. You know what, I23 think you're right. This predated the sale24 order. This is Wednesday -- this is the 17th of25 September, so there was a stay put into place


Page 216

1 ROSEN2 a conversation and asked them to focus on it and3 then come back. I think there was -- they4 understood what the import of it was. And then5 they came back and confirmed that they6 wouldn't -- you know, that they agreed they7 wouldn't exercise that right to seek a stay.8 But it didn't take a lot of to'ing and fro'ing9 on the telephone to get there. Their people are

10 I think quite familiar with their rights.


Page 215

1 ROSEN2 and I guess this was to seek clarification of3 that.4 Q. This refers to the SIPC order, the5 SIPA order?6 THE WITNESS: Is that the only order?7 MR. GAFFEY: Let's go off the record8 for a minute.9 (Recess)

10 MR. GAFFEY: Back on the record.11 Q. Mr. Rosen, do you know one way or the12 other what order is being referred to? I mean13 from memory, do you know one way or the other14 what order is being referred to in the document15 we have marked as 631, your e-mail?16 A. I believe it was in anticipation of17 the sale order, but I'm not 100 percent18 confident.19 Q. And how much time -- I know it was a20 busy week -- but how much time did you devote to21 conversations with the SEC about this assurance22 language that's set out in Exhibit 631, this23 issue?24 A. I really don't have a clear25 recollection. We sent it down to them and I had


Page 217

1 ROSEN

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1 ROSEN2 3 4 5 67 8 9

10 1112 13 14 15 16 17 Q. You referred a few times today in18 various contexts to -- you can put the document19 aside. To various circumstances where -- and20 this is, again, not a quote, but you talked21 about jeopardy to the deal closing by Monday the22 22nd, that's a prospect that you have talked23 about a few times today. Was there a drop-dead24 date for closing?25 A. No, there was just a perception that


Page 219

1 ROSEN


Page 221

1 ROSEN2 if it didn't close by Monday, there could be3 developments in the marketplace which might have4 complicated or prevented the deal from getting5 done. I don't think it was an ultimatum.6 I think people wanted to get the deal7 done, but I think there was a concern that8 letting another business cycle go by was just --9 because we didn't know what was going to happen.

10 I think this was the weekend where we had11 learned very late Sunday night that, you know,12 Morgan Stanley and Goldman Sachs had quite13 expeditiously become banks and people were14 worried and the hurry to do that was no doubt in15 part due to concerns.16 So I wouldn't say that it was a drop17 dead or an ultimatum or anything like that. It18 was that people realized it became more19 complicated and there was more noise that could20 interfere with the transaction the more time21 that elapsed. So we all, I think internally at22 Cleary regarded it as, put it this way, if the23 deal wasn't ready to close on Monday, we didn't24 want to be the ones responsible for it not being25 ready to close on Monday morning, so we took it

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Page 222

1 ROSEN2 3 Q. That issue aside, the deal could have4 closed on Tuesday?5 A. Theoretically, it could have closed on6 Tuesday if things hadn't intervened. It was7 more the risks that were associated with not8 closing expeditiously that were the concerns.9 You had to remember, the markets were very

10 volatile and there were assets whose valuation11 was the source of considerable uncertainty and12 concern.13 14 15 16 17 18 1920 ____________________

EDWARD J. ROSEN2122 Subscribed and sworn to

before me this EDWARD J. ROSEN day23 of February, 2010.2425 _______________________


Page 224

1 ROSEN2 EXHIBITS3 Exhibit No. Marked4 Exhibit 631 document Bates stamped 2135 BCI-EX(S) 201894 through 956 Exhibit 632 document Bates stamped CGSH 2207 163813 through 81589

10111213141516171819202122232425


Page 223

1 ROSEN2 INDEX:3 WITNESS EXAM BY: PAGE:4 E. Rosen Mr. Maguire 65 Mr. Gaffey 2026 EXHIBITS7 Exhibit No. Marked8 Exhibit 622 declaration of Edward J. Rosen 89 Exhibit 623 document Bates stamped 120

10 CGSH0002699 through 70011 Exhibit 624 document Bates stamped DTCC 12212 00126 through 0019813 Exhibit 625 document Bates stamped DTCC 15214 00359 through 36115 Exhibit 626 document Bates stamped BCI-CG 17516 00024097 through 9917 Exhibit 627 document Bates stamped CGSH 18118 0034491 through 9219 Exhibit 628 document Bates stamped 18320 OCC36408 through 40921 Exhibit 629 document Bates stamped OCC 18622 0036472 through 3647323 Exhibit 630 document Bates stamped OCC 19524 0036482 through 48325


Page 225

1 ROSEN2 CERTIFICATE3 STATE OF NEW YORK )4 )ss:5 COUNTY OF NEW YORK)6 I, MARY F. BOWMAN, a Registered7 Professional Reporter, Certified Realtime8 Reporter, and Notary Public within and for9 the State of New York, do hereby certify:

10 That EDWARD J. ROSEN, the witness11 whose deposition is hereinbefore set forth,12 was duly sworn by me and that such13 deposition is a true record of the testimony14 given by such witness.15 I further certify that I am not16 related to any of the parties to this action17 by blood or marriage and that I am in no way18 interested in the outcome of this matter.19 In witness whereof, I have hereunto20 set my hand this 19th day of February, 2010.2122 __________________________


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1 ROSEN2 * * *ERRATA SHEET* * *3 NAME OF CASE: In Re: Lehman Brothers4 DATE OF DEPOSITION: February 19, 20105 NAME OF WITNESS: EDWARD J. ROSEN6 Reason codes:7 1. To clarify the record.








From ___________________ to_________________222324 _______________________

EDWARD J. ROSEN25

ERRATA SHEET

NAME OF CASE: In re: Lehman Brothers Holdings. Inc., Case No. 08-13 555 (JMP)

DATE OF DEPOSITION: Februaryl19, 2010

NAME OF WITNESS: Edward J. Rosen

1. p. 11, linel15

Description - add "and" after "market"

Reason for Change - transcription error

2. p. 16, line 24

Description - change "exchange" to "exchanges"

Reason for Change - transcription error or to clarify response

3. p. 19, line 10

Description - add "by" after "and"


4. p. 19, line 17

Description - delete "to"

Reason for Change - to clarify response

5. p. 19, line 24

Description - change "brother teller" to "broker dealer"


6. p. 32, line 7

Description - delete "the"


7. p. 41, line 6

Description - add "and" before "there"

Reason for Changze - transcription error or to clarify response

8. p. 41, linel17

Description - add "the" before "customer"


9. p. 41, linel18

Description - change "them" to "it"


10. p. 53, lines 8-9

Description - add "then" after "I was there" and add "reconvened" after "it was"


11. p. 55, line 22

Description - add "and" after "amendment"


12. p. 58, line 19

Description - change "3-3" to "15c3-3"


13. p. 58, line 23

Description - change "it" to "the amount"

Reason for Change -to clarify response

2

14. p. 59, line 2

Description - add "was" before "contemplated"

Reason for Changze - to clarify response

15. p. 60, linelIl

Description - change "Those" to "The"


16. p. 60, line 16

Description - add "or" after "alternatives"


17. p. 61, linel16

Description change "were" to "where"


18. p. 62, line 7

Description - add "a participant" after "was"


19. p. 75, lines 6and 7

Description - change "insure" to "ensure" (there are two instances)

Reason for Change - spelling mistakes

20. p. 75, line 10

Description - change "at" to "that"


3

21. p. 75, linell

Description - add "against" after "protected"


22. p. 75, line 23

Description - add "or" after "of,"'


23. p. 79, line 6

Description - add "not" after "had"

Reason for Change - to correct response

24. p. 82, line 8

Description - add "only" after "not"

Reason for Change - transcription error or to correct response

25. p. 83, line 6

Descrip~tion - change "cash" to "non-cash"

Reason for Change - transcription error or to correct response

26. p. 87, line 17

Description - change "read" to "make"


27. p. 87, line 18

Description - add "at" after "know"


4

28. p. 93, line 24



29. p. 96, line 2

Description - delete "a"


30. p. 96, line 3



31. p. 96, line 9

Descrip~tion - change "him. I" to "him, but I"


32. p. 96, lines 20-21

Description - change "those effects" to "that effect"


33. p. 97, line 23



34. p. 108, line 21



5

35. P. I113, line 15



36. p. 125, line 4

Description - add "there" after "recourse"


37. p. 125, line 23

Description - change "in" to "sitting"


38. p. 129, line 12

Description - change "a" to "the"


39. p. 13 1, line 25

Description - change "accountant" to "accounts"


40. p. 134, line 10

Description - change "prefer to do" to "prefer not to have to do"


41. p. 135, line 14

Description - add "facts" after "presupposes"


6

42. p. 135, line 18

Description - delete "which"


43. p. 138, line 4

Description - add "million" after "250"


44. p. 138, line 13

Description - change "some" to "the source"

Reason for Changze - transcription error or to correct response

45. p. 138, line 16

Description - add "that" before "was"


46. p. 141, line 18

Description -- delete "their principals"


47. p. 142, line 14

Description - add "million" after "250"


48. p. 142, line 15

Description - add "that" after "like"


7

49. p. 143, line 23

Description - change "was being" to "had been"


50. p. 149, line 3

Description - change "Dan" to "Don"


51. p. 150, line 25

Description - add "and DTC" after "Barclays"


52. p. 153, line 5

Description - change "in" to "and"


53. p. 153, line 10

Description - change "them" to "him"


54. p. 160, line 9

Description - change "would realize" to "have organized"


55. p. 165, line 23

Description - change "draft" to "drafts"


8

56. p. 166, line 9

Description - add "its location" after "describe"


57. p. 166, line 10

Description - change "was a room on a floor" to "were rooms on two floors"


58. p. 176, line 23

Description - change "future" to "futures"


59. p. 179, line 12

Description - add "that" after "for"


60. p. 186, line 6

Description - add "what" after "about"


61. p. 186, line 9

Description - add "the 0CC" after "obligations"


62. p. 191, line 8

Description - change "executed the TAA and was carrying at" to "Barclays executed the TAA

and was carrying the account at"


9

63. p. 191, linel19

Description - change "So it performed an obligation of' to "So if Barclays performed an

obligation in respect of"


64. p. 193, line 15

Descrip~tion - delete "will"


65. p. 194, line 18

Description - change "on, my recollection, is to" to "on, it is my recollection, to"


66. p. 195, line 3

Description - change "feeling" to "dealing"


67. p. 195, line 24

Description - change "sort of the" to "0CC"


68. p. 196 , line 8

Description - change "saying" to "sanguine"


69. p. 197, line 8

Description - change "options" to "listed options business"


10

70. p. 201 ,line 4

Description - change "than" to "that were"


71. p. 205, line 7

Description - change "34 SIPC" to "34 Act or SIPA"


72. p. 206, line 2

Description - add "and" after "insolvency"


73. p. 21 1,line 25

Description - change "of the language included" to "language to be included"


74. p. 212, line 2

Description - change "SIPC" to "the SEC"


75. p. 212, linel10

Description - change "Sharbeck" to "Harbeck"'

Reason for Change - spelling error

I1I

ACKNOWLEDGMENT OF DEPONENT

Pursuant to 28 U.S.C. § 1746, I, Edward J. Rosen, hereby certify that I have read thetranscript of my testimony taken under oath in my deposition of February 19, 201 0; that, subjectto the corrections noted on the attached errata sheet, the transcript is a true, complete and correctrecord of my testimony.

I certify under penalty of perjury that the foregoing is true and correct.

March 16, 201 0

New York, New York

Edward/J. Rosen

12

A. 160


Page 1

1


SOUTHERN DISTRICT OF NEW YORK

3 -------------------------------x

In Re: Chapter 11

4 LEHMAN BROTHERS Case No. 08-13555 (JMP)

HOLDINGS, INC., et al., (Jointly Administered)

5 -------------------------------)

6

7 * * * HIGHLY CONFIDENTIAL * * *

8 DEPOSITION OF ANTHONY SAUNDERS


10 Monday, February 8, 2010

11

12

13

14

15

16

17

18

19 Reported by:

FRANCIS X. FREDERICK, CSR, RPR, RMR

20 JOB NO. 28244

21

22

23

24

25

2 (Pages 2 to 5)


Page 2

12345 February 8, 20106 9:35 a.m.789 HIGHLY CONFIDENTIAL deposition of

10 ANTHONY SAUNDERS, held at the offices of11 Jones Day, 222 East 41st Street, New12 York, New York, pursuant to Notice,13 before Francis X. Frederick, a Certified14 Shorthand Reporter, Registered Merit15 Reporter and Notary Public of the States16 of New York and New Jersey.171819202122232425


Page 4

12 A P P E A R A N C E S: (Cont'd.)34 HUGHES, HUBBARD & REED, LLP5 Attorneys for the SIPA Trustee6 One Battery Park Plaza7 New York, New York 10004-14828 BY: CARL W. MILLS, ESQ.9

10111213141516171819202122232425


Page 3

12 A P P E A R A N C E S:34 JONES DAY, LLP5 Attorneys for Lehman Brothers, Inc.6 222 East 41st Street7 New York, New York 10017-67028 BY: DAVID L. CARDEN, ESQ.9 BART GREEN, ESQ.

1011 BOISE SCHILLER & FLEXNER, LLP12 Attorneys for Barclays Capital13 575 Lexington Avenue - 7th Floor14 New York, New York 1002215 BY: JACK G. STERN, ESQ.1617 QUINN, EMANUEL, URQUHART, OLIVER &18 HEDGES, LLP19 Attorneys for the Creditors Committee20 51 Madison Avenue - 22nd Floor21 New York, New York 1001022 BY: ROBERT K. DAKIS, ESQ.232425


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1 A. SAUNDERS - CONFIDENTIAL

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1 A. SAUNDERS - CONFIDENTIAL23 456 7,89

10 111213 In your view did the market care14 what the terms of the transaction were?15 A. I think they really cared so much16 about the support Barclays gave to Lehman and17 to allow Lehman go down with a fire sale.18 Q. And just to make certain I'm19 clear, the specific terms of the transaction,20 whether or not Barclays made a billion dollars21 or spent an extra billion dollars on getting22 it, the market was indifferent to those kinds23 of -- to that kind of granular analysis,24 right?25 A. That's a very general question.

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1 A. SAUNDERS - CONFIDENTIAL2 Who do you mean in the market?3 Q. Well, you've talked to me about --4 or pardon me. You've talked in your report5 about the impact on the markets. So I'm6 speaking about the market generally.7 A. Yeah. I'm saying in the big8 picture view I think people were highly9 concerned about other banks going down. And

10 they were concerned about resolving that11 issue. And I think they just were happy to12 see Lehman being taken over by Barclays.13 Q. Yeah. Just make sure I'm clear on14 what you're saying. It was the mere fact of15 Barclays taking Lehman over, not the terms of16 the transaction that was salutary to the17 market as you stated in your report.18 A. Well, I think people didn't know19 what the actual terms were. Even Barclays,20 itself, at the time because of the uncertainty21 of the assets and the liabilities didn't know22 the actual terms of the deal. All it knew was23 that it was acquiring the business.24 Q. Okay. I take it you would agree25 with me that on Monday, the 22nd of September,


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1 A. SAUNDERS - CONFIDENTIAL2 report.3 (Deposition Exhibit 600, Expert4 Report of Professor Anthony Saunders,5 January 8, 2010, marked for6 identification as of this date.)7 BY MR. CARDEN:8 Q. Just to make certain we're clear9 on our dates today, I think you're quite aware

10 that, as we've already said, September 22nd11 was the date the transaction closed. That was12 a Monday.13 A. Um-hum.14 Q. The court hearing approving the15 transaction was on Friday, September 19th and16 into the early morning hours of September17 20th, correct?18 A. That's my understanding.19 Q. And the Asset Purchase Agreement,20 which is referenced in your report, is dated21 September 16th, the Tuesday, right?22 A. Correct.23 Q. The salutary effect that the24 transaction had on the market which you25 reference in your report, was that salutary


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1 A. SAUNDERS - CONFIDENTIAL2 when the transaction closed, the market did3 not know the terms of that transaction,4 correct?5 MR. STERN: Objection to the form.6 A. I would say it's very close to7 arguing that Barclays didn't know the terms8 either.9 Q. I just want to be get a yes or no

10 to my question. I'm not sure I understood11 your answer.12 A. I'm just saying in general very13 few people, if any, knew the value of that14 deal.15 Q. And that was true on September16 22nd of 2008, correct?17 A. That's my belief, yes.18 Q. And it was true on September 23rd19 of 2008, correct?20 A. Yes. That's correct.21 Q. And throughout the week of22 September 22nd it remained true, did it not?23 A. That's true.24 Q. So -- I think you say --25 MR. CARDEN: Let's just mark your


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1 A. SAUNDERS - CONFIDENTIAL2 effect achieved by the approval of the3 transaction on Friday, September 19th?4 A. You said the 20th or --5 Q. Oh, and into the morning of the6 20th.7 A. Was the salutary effect? I think,8 yes, my but-for world is to consider one case9 where the transaction had been refused or

10 turned down on the 20th.11 Q. And the -- I think -- you recall12 the reference in your report to the salutary13 effect of the transaction on the market,14 correct?15 A. Yes.16 Q. That salutary effect on the market17 had already been accomplished by the time the18 transaction actually closed on the 22nd, had19 it not?20 A. No. The market was closed over21 the weekend. I think over the weekend Morgan22 Stanley and Goldman Sachs were in terrible23 trouble, not clear that they were going to24 open. My view is if the transaction had been25 refused on the 20th there's every possibility

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1 A. SAUNDERS - CONFIDENTIAL2 they might not have opened on the 22nd. In my3 opinion.4 Q. I think you answered something5 different than I asked. I'm not sure. Let me6 just try again. The salutary effect which you7 reference in your report that the transaction8 had on the marketplace was an effect that was9 accomplished in connection with the

10 Lehman/Barclays transaction by the court's11 approval on September 19th and into the early12 morning hours of September 20th, correct?13 A. Perhaps I'm missing what you're14 saying. I'm saying the salutary effect is the15 effect on the market once it opens on a16 Monday. The market is closed on the weekend.17 So I'm not quite sure I understand what you're18 trying to get at.19 Q. Okay. I understand our disconnect20 here. Let me try again.21 I appreciate the market is not22 opened on the weekend so there cannot be any23 market impact on the weekend. But what I'm24 saying is that when the market opened on25 Monday, the salutary effect that the


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1 A. SAUNDERS - CONFIDENTIAL2 the early morning hours of the 20th but had3 closed on, say, Wednesday, the 24th, just to4 get the paperwork done, would that have had5 any adverse impact on the market?6 A. Well, I think Barclays had7 committed or pre-committed to do the deal so I8 think the markets would have known rationally9 that the deal would have been completed on the

10 23rd or 24th.11 Q. Right.12 A. I mean, obviously, the longer the13 time between the approval and the actual14 conclusion of the deal then there's more15 uncertainty. But you asked me like two days16 later would it make much of an effect, I would17 say no.18 19202122232425


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1 A. SAUNDERS - CONFIDENTIAL2 transaction -- the Lehman/Barclays transaction3 had was as a consequence of the court's4 approval on the 19th and the 20th, correct?5 A. I believe as a financial economist6 that Goldman or Morgan Stanley might not have7 opened for business on the Monday without the8 Lehman deal going through. If that's not9 salutary effect, I don't know what is because

10 if they'd gone down everybody would have gone11 down.12 Q. I'm not contesting for purposes of13 my question whether or not you're correct in14 your conclusion about it having a salutary15 effect or not. I'm simply trying to16 understand what was it that caused the17 salutary effect and that was the approval by18 the court, wasn't it?19 A. Yes. That Barclays was going to20 take over LBI.21 Q. Okay. Now, with regard -- just22 trying to understand the timing of things for23 the week so we can come back and take it24 apart. If the transaction between Lehman and25 Barclays had been approved on the 19th into


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1 A. SAUNDERS - CONFIDENTIAL2 3 4 5 6 7 8 9

10 11 121314151617 18 19 Q. I apologize. We're on paragraph20 12, your report, second full sentence. It21 begins in the penultimate line, the phrase --22 I'll just read the whole sentence. "As such,23 it is reasonable to believe at the time, and24 it is also reasonable to conclude now that the25 acquisition had a calming and salutary effect


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1 A. SAUNDERS - CONFIDENTIAL2 moment though. It is in the nature of and in3 the business of financial institutions to take4 risk; isn't it, Mr. Saunders?5 A. Yeah. But usually you have time6 to do proper due diligence. This was a case7 where there was nearly no time to do due8 diligence and time was of the essence. And9 everything was done in a very, very telescoped

10 period.11 Q. Many question was simply isn't it12 in the nature of financial institutions to13 take risk?14 A. To take risks, sure. But to15 understand the risk that they're taking is16 important.17 Q. If in the transaction between18 Barclays and Lehman Brothers, Lehman had19 realized a gain on the transaction, would the20 same salutary effect you reference in21 paragraph 12 have occurred?22 A. You mean ex post?23 Q. Yeah.24 A. Like going ahead like a year25 later?


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1 A. SAUNDERS - CONFIDENTIAL2 on conditions in the financial markets."3 Do you see that?4 A. Yes.5 Q. And by that you're referring to6 the transaction that was approved on the 19th7 and the 20th as you've said, correct?8 A. That the approval of the9 acquisition.

10 Q. Yes.11 A. Yes.12 Q. Okay. Would that same salutary13 effect have occurred had Lehman Brothers14 realized a gain on the transaction of15 $5 billion?16 A. Well, nobody knew what the gains17 or not were at the time. Barclays had taken18 an enormous risk. So I don't --19 Q. I'm not talking about Barclays'20 risk.21 A. I mean, ex post or ex ante? I22 mean, I'm not sure what world we're in.23 Q. Let's just stay with my question24 for a moment. I'm not talking about what risk25 was assumed. Let's deal with risk for just a


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1 A. SAUNDERS - CONFIDENTIAL2 Q. Well, any time.3 A. I mean, be reasonable in terms of4 what time period we're talking about here.5 Q. Well, your report doesn't6 reference any time period in terms of the7 salutary effect except immediately.8 A. Yes.9 Q. Your report on the salutary effect

10 on the market really is an immediate effect,11 correct?12 A. Absolutely.13 Q. Okay. It is not what might have14 happened six months later.15 A. That's correct.16 Q. Okay. So let's stay with your17 approach to salutary effect as of on18 immediate, all right? You with me?19 A. Yes.20 Q. Okay. If Lehman Brothers had21 recognized a gain on the transaction of22 $5 billion would the same salutary effect that23 the transaction had when it was approved have24 occurred?25 A. The salutary effect was an

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1 A. SAUNDERS - CONFIDENTIAL2 immediate effect. Ex post there was an3 outcome where Barclays made a gain. If Lehman4 would have made a gain this would have been5 after the fact. I mean, nobody would know in6 the future.7 Q. Are you simply saying that it8 would not have an impact on your conclusion9 that it was salutary because nobody knew

10 whether there was a gain or a loss?11 A. Nobody knew at the time. Nobody12 knew the assets and the liabilities. There13 was a huge risk. Barclays took the risk. Ex14 post it turned out to be profitable. Ex post15 it could have turned out to be a loss. It16 happened to be, because of the uncertainty,17 enormous, it turned out, ex post to be18 profitable to Barclays. But at the time the19 salutary effect was the immediacy of the20 transaction.21 Q. And the salutary effect was only22 the immediacy of the transaction, not the23 terms of the transaction, correct?24 A. The terms of the transaction was25 the acquisition of the business. The business


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1 A. SAUNDERS - CONFIDENTIAL2 correct?3 A. I was saying at the time there was4 huge uncertainty about the terms of the5 transaction.6 Q. So the market didn't know that.7 A. They might have had expectations8 but nobody would know with certainty what the9 terms of the transaction were.

10 Q. Did you know -- did you do an11 analysis of what the market's expectations12 were of the terms of the transaction?13 A. Well, as I say, I just don't14 believe anybody really knew at that time the15 terms of the transaction. All they knew was16 that Barclays took an enormous risk.17 Q. Did you read the transcript of the18 appearance before the court on the 19th and19 the 20th?20 A. Way, way back. Probably in21 August, September when I was engaged to do22 this report.23 Q. And in reading that transcript did24 you develop an opinion as to what the terms of25 the transaction were?


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1 A. SAUNDERS - CONFIDENTIAL2 was both the real and the financial assets3 which were uncertain at the time. Barclays4 took a huge risk.5 Q. My question again is different.6 My question is without regard to what happened7 in the future, it is the mere fact of the8 transaction having taken place that created9 the salutary effect in the marketplace, not

10 the question of who gained or who lost on the11 transaction, correct?12 A. Because nobody would know back13 then who would gain and who would lose.14 Q. So you're agreeing with me,15 correct?16 A. I'm saying we don't know because17 of the uncertainty at the time. The salutary18 effect was the transaction took place to19 eliminate this issue about too big to fail.20 Q. I just want to make sure what21 you're saying. I'm just trying to get to what22 you're saying now. You're saying the salutary23 effect had nothing at all to do with what the24 terms of the transaction were because the25 market didn't know what the terms were,


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1 A. SAUNDERS - CONFIDENTIAL2 A. No. I think my impression from3 the whole -- was the need of the timing was4 immediacy and time was of the essence and5 there was huge uncertainty.6 Q. I appreciate the need. I7 appreciate the uncertainty. I'm asking a8 different question. The question is when you9 read the transcript did you develop an opinion

10 as to what you thought the terms of the11 transaction were?12 MR. STERN: In fairness, David,13 when you're talking about terms are we14 talking about contractual terms or value15 terms?16 MR. CARDEN: Any way he wants to17 characterize it.18 MR. STERN: You're using this19 phrase "terms" of the transaction as if20 we're talking about the contractual21 terms which obviously were written down22 but are we talking about values or23 contractual terms?24 A. I'm understanding you're talking25 about the value.

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1 A. SAUNDERS - CONFIDENTIAL2 Q. Yes.3 A. I mean, I think the numbers are in4 the contract, presumably.5 Q. I was -- that's right. We're not6 always grateful for Jack's somewhat lengthy7 objections but he didn't really object. I8 don't mind his contribution here. All I'm9 really saying is --

10 A. I'm an economist. When I think11 you say terms I'm thinking of value.12 Q. That's what I was meaning by that.13 So we're on the same page.14 A. Not contractual terms.15 Q. That's right. So, you now, last16 time I was with you we established you're not17 an expert at the law. So we don't have to go18 back over that territory.19 But let me ask you, on Friday, the20 19th, then Saturday, the 20th when -- strike21 that.22 When you read the transcript of23 the court appearance on the 19th and the 20th,24 did you develop an opinion of what the terms25 of the transaction were?


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1 A. SAUNDERS - CONFIDENTIAL2 were able to determine what the value of the3 transaction was based upon reading the4 transcript of the court appearance on5 September 19th and 20th?6 A. No.7 MR. STERN: Are we done with8 paragraph 12?9 MR. CARDEN: We are.

10 Q. Let's look at paragraph 11. And11 I'm just coming back and picking something up12 we talked about a little earlier. In the13 second line of paragraph 11 you state that14 virtually every major financial institution15 was fragile.16 Do you see that?17 A. Yes.18 Q. Were there any exceptions to the19 fragility of any of those major financial20 institutions as of September 2008 in your21 view?22 A. Well, I think --23 Q. Or was it all relative?24 A. It's relative.25 Q. They were all at risk, weren't


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1 A. SAUNDERS - CONFIDENTIAL2 A. All I would say this was a huge3 risk. My impression was that it was a huge4 risk for Barclays because it was very5 difficult at that time given the turmoil in6 the market to figure out the value of the7 assets and the value of the liabilities.8 Q. Are you telling me you didn't9 develop an understanding of the terms, Mr.

10 Saunders? I don't mean to be ungenerous but11 every time I ask you a question you don't need12 to give me the Talismanic invocation of risk.13 A. No, I understand the contractual14 terms, but the values of those assets and15 liabilities were highly uncertain. That's16 what I'm trying to get across.17 Q. The court was told what some of18 those assets were worth, correct?19 A. I don't remember.20 MR. STERN: Objection to the form.21 A. I don't know.22 Q. Okay. Then let's just go to that23 and make certain we get it out of the way.24 Do you have a present25 recollection, Mr. Saunders, as to whether you


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1 A. SAUNDERS - CONFIDENTIAL2 they, sir?3 A. Everybody's at risk. That's the4 idea of financial institutions. But I think5 Barclays was one of the most soundest of the6 financial institutions in the world.7 Q. I didn't say anything about8 Barclays. I was just asking about whether9 you --

10 A. I was giving you an example.11 Q. Do you agree with me, Mr.12 Saunders, that the market would not have13 thought it to be a catastrophe if Barclays14 had, at the moment it did the transaction,15 recognized a loss?16 A. I don't understand how it could --17 I'm not an accountant. I don't know how18 you --19 Q. I'm just asking you for your view20 on the markets. The markets -- we're talking21 about the markets.22 Would the markets, on Monday,23 September 22nd, have thought it to be a24 catastrophe if Barclays had lost money on day25 one in entering into the Lehman transaction?

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1 A. SAUNDERS - CONFIDENTIAL2 A. I really don't know what you mean3 by losing money. I mean, it's such a wide4 open question. What do you mean by losing5 money?6 Q. Well, do you think the market7 would have cared one way or the other whether8 Barclays lost money on the transaction when it9 opened for business on the 22nd?

10 A. I just think that they were11 concerned that Barclays did the deal.12 Q. Not whether Barclays made or lost13 money, correct?14 A. Nobody whether Barclays would --15 at the time there was huge uncertainty. I'll16 just reiterate what I said.17 Q. But if the market had known that18 Barclays lost money on the transaction, do you19 agree with me that it would not have thought20 it to be a catastrophe?21 MR. STERN: Objection to the form.22 A. I just don't understand the23 question. It's --24 Q. Well, do you think the market25 cared on Monday morning, September 22nd,


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1 A. SAUNDERS - CONFIDENTIAL2 come at the second --3 A. It doesn't make economic sense to4 me.5 Q. Well, I'm trying to keep the focus6 on the market. Now you just brought it over7 to Barclays. And, you know, we're going to8 get on fine so long as we stay on my focus9 here. And we can come back to that if you

10 wish but the point is I'm asking about the11 market, not about Barclays and what Barclays12 would or wouldn't have done. That's for13 Barclays to argue. You don't need to argue14 that for them.15 I'm asking about the market. So16 let's stay with the market for a moment, all17 right?18 On Monday morning, September 22nd,19 had the market learned some way that Barclays20 had actually realized a loss on the Lehman21 transaction, would it have been a catastrophe22 for the market?23 MR. STERN: Objection to the form.24 A. The market's so generic. It25 includes Barclays' shareholders. It includes


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1 A. SAUNDERS - CONFIDENTIAL2 whether or not Barclays did or did not make3 money on the transaction with Lehman Brothers?4 A. They were happy that Barclays, as5 I said, took over Lehman.6 Q. I understand they cared about the7 fact of the transaction. We've established8 that.9 A. Yes.

10 Q. I understand you to be saying that11 on Monday morning, September 22nd, the market12 was very -- it was a salutary effect that13 there was a transaction, correct?14 A. Correct.15 Q. Okay. My question is different.16 My question is would the market -- would that17 salutary effect on the market not have taken18 place had the market known that Barclays lost19 money as of that moment on the Lehman20 transaction?21 A. Well, why rationally would22 Barclays, if it knew exactly at that time it23 was going to lose money, would it have done24 the transaction?25 Q. Just answer my question. We can


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1 A. SAUNDERS - CONFIDENTIAL2 shareholders of other banks. What do you mean3 by the market?4 Q. Well, you've used "the market"5 throughout your report, sir. I'm using it the6 same way you're using it.7 A. Yes, but not in the context of8 this hypothetical that you're talking about.9 Q. Well, you say in paragraph 12 --

10 A. I'm saying there's huge11 uncertainty at the time.12 Q. Okay. Let's go to paragraph 12.13 You tell me that the acquisition had a calming14 and salutary effect on conditions in financial15 markets.16 Do you see that?17 A. Yes.18 Q. Now, if the transaction had --19 pardon me.20 If at the moment the transaction21 was closed on Monday morning, September 22nd,22 and Barclays realized a loss on the23 transaction, would that salutary effect have24 been destroyed, sir?25 A. I think there would still have

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1 A. SAUNDERS - CONFIDENTIAL2 been a salutary effect but it might have been3 different.4 Q. You didn't do any analysis on5 that, sir, did you?6 A. I didn't believe that it was a7 reasonable possibility. Nobody knew the8 assets and liabilities at the time. So I9 thought it was just something worth -- not

10 worth looking at.


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10 1112 13 1415 Q. So if you didn't see any16 valuations then I take it they couldn't have17 formed the basis of your conclusion that it18 had a salutary effect, correct?19 A. It had a salutary effect because20 the market was concerned about Lehman being21 taken over and not going under.22 Q. Again, to try to be clear, the23 salutary effect you describe in your report24 that resulted from the signing of the APA was25 as a consequence of the transaction occurring

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1 A. SAUNDERS - CONFIDENTIAL2 as opposed to the specific the terms of that3 transaction, correct?4 A. Well, the transaction being5 proposed to occur.6 Q. Yes. Correct?7 A. Correct.


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1 A. SAUNDERS - CONFIDENTIAL23 4 5 6 7 8 9

10 11 12 13 14 15 16171819 ____________________20 ANTHONY SAUNDERS2122 Subscribed and sworn to before me23 this ___ day of __________, 2010.2425 _________________________________

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12 C E R T I F I C A T E3 STATE OF NEW YORK )4 : ss.5 COUNTY OF NEW YORK )6 I, FRANCIS X. FREDERICK, a Notary7 Public within and for the State of New8 York, do hereby certify:9 That ANTHONY SAUNDERS, the witness

10 whose deposition is hereinbefore set11 forth, was duly sworn by me and that12 such deposition is a true record of the13 testimony given by the witness.14 I further certify that I am not15 related to any of the parties to this16 action by blood or marriage, and that I17 am in no way interested in the outcome18 of this matter.19 IN WITNESS WHEREOF, I have20 hereunto set my hand this 8th day of21 February, 2010.2223 _____________________24 FRANCIS X. FREDERICK25


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12 NAME OF CASE: IN RE: LEHMAN BROTHERS3 DATE OF DEPOSITION: FEBRUARY 8, 20104 NAME OF WITNESS: ANTHONY SAUNDERS5 Reason codes:

1. To clarify the record.6 2. To conform to the facts.

3. To correct transcription errors.7 Page _______ Line ______ Reason _____

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ANTHONY SAUNDERS25


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12 ----------------- I N D E X ------------------3 WITNESS EXAMINATION BY PAGE4 ANTHONY SAUNDERS MR. CARDEN 556789 ----------- INFORMATION REQUESTS -------------

10 DIRECTIONS: NONE11 RULINGS: NONE12 TO BE FURNISHED: NONE13 REQUESTS: NONE14 MOTIONS: NONE1516 ------------------ EXHIBITS ------------------17 EXHIBIT FOR ID.18 Exhibit 60019 Expert Report of Professor20 Anthony Saunders, January 8, 2010....... 162122232425

A. 161


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4 ----------------------x

5 In Re:

6 Chapter 11


8 HOLDINGS, INC., et al., (Jointly Administered)

9

Debtors.

10

-----------------------x

11

12

13

14 CONTINUED VIDEOTAPED DEPOSITION OF JAMES SEERY


16 March 3, 2010

17

18

19

20

21

22

23 Reported by:

24 KATHY S. KLEPFER, RMR, RPR, CRR, CLR

25 JOB NO. 28549

2 (Pages 224 to 227)


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12 March 3, 201034 Continued videotaped deposition of5 JAMES SEERY, held at the law offices of6 Quinn, Emanuel, Urquhart, Oliver & Hedges,7 LLP, 51 Madison Avenue, New York, New York,8 before Kathy S. Klepfer, a Registered9 Professional Reporter, Registered Merit

10 Reporter, Certified Realtime Reporter,11 Certified Livenote Reporter, and Notary12 Public of the State of New York.13141516171819202122232425


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123 A P P E A R A N C E S: (Cont'd.)45 HUGHES, HUBBARD & REED, LLP6 Attorneys for the SIPA Trustee7 One Battery Park Plaza8 New York, New York 10004-14829 BY: CARL W. MILLS, ESQ.

1011121314 ALSO PRESENT:15 MATTHEW SMITH, Legal Video Specialist16171819202122232425


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1

2 A P P E A R A N C E S:3

4 JONES DAY, LLP5 Attorneys for Lehman Brothers, Inc.6 222 East 41st Street7 New York, New York 10017-67028 BY: JENNIFER DEL MEDICO, ESQ.9

10 BOIES, SCHILLER & FLEXNER, LLP11 Attorneys for Barclays Capital12 575 Lexington Avenue - 7th Floor13 New York, New York 1002214 BY: JACK G. STERN, ESQ.15

16 QUINN, EMANUEL, URQUHART, OLIVER & HEDGES, LLP17 Attorneys for the Creditors Committee18 865 Figueroa Street, 10th Floor19 Los Angeles, California 9001720 BY: ERICA P. TAGGART, ESQ.21 TYLER WHITMER, ESQ.22

23

24

25


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10 1112 13115 16 17181920 21 Q. Okay. So let's look now at what I've22 put before you as Exhibit 666. Can you identify23 this document?24 A. It's kind of evil. That's very funny.25 These are documents that -- excuse me.


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1 J. Seery2 I got a good chuckle out of that -- these are3 documents that are part of some notes that I4 have with -- from around the time that Lehman5 was sold to Barclays.6 Q. And if you turn to the very last page7 that ends in the Bates that ends in 70, does8 this relate to the information that you received9 from Lehman traders?

10 A. This does.11 Q. Okay. Can you just flip through to12 see, are there any other pages that relate to13 the information that you got back from Lehman14 traders?15 A. I don't think so. I mean, there are16 some -- I don't think so.17 Q. Okay. So can you describe what is18 being shown here on that last page that's 70? I19 can -- did you create this document?20 A. I don't believe I created it. I don't21 know who did this for me.22 Q. Did you give input into this document?23 A. Yes, I believe so.

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10 111213 14 1516 17 1819 20 Q. Okay. Under that is 45.5. What did21 that figure represent?22 A. I don't recall how it came up with23 that 45.5. That's my writing.24 Q. And what about 1.9BN, what does that25 represent?


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1 J. Seery2 A. I don't recall right now what that is.3 I'd have to refresh my recollection on that.

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10 11 12 13 14 15 16 17 oOo1819 ____________________

JAMES SEERY2021 Subscribed and sworn to

before me this day22 of 2010.23

_______________________2425


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1 J. Seery2 CERTIFICATE3 STATE OF NEW YORK )

: ss4 COUNTY OF NEW YORK)5 I, Kathy S. Klepfer, a Registered6 Merit Reporter and Notary Public within and7 for the State of New York, do hereby8 certify:9 That JAMES SEERY, the witness whose

10 deposition is herein before set forth, was11 duly sworn by me and that such deposition is12 a true record of the testimony given by such13 witness.14 I further certify that I am not15 related to any of the parties to this action16 by blood or marriage and that I am in no way17 interested in the outcome of this matter.18 I further certify that neither the19 deponent nor a party requested a review of20 the transcript pursuant to Federal Rule of21 Civil Procedure 30(e) before the deposition22 was completed.23 In witness whereof, I have hereunto24 set my hand this 3rd day of March, 2010.25 -------------------------------

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Page 396

1 J. Seery2 INDEX3 TESTIMONY OF J. SEERY: PAGE4 Examination by Ms. Taggart ................ 2285 Examination by Mr. Mills ................ 38367 EXHIBITS: PAGE8 Exhibit 665, Declaration of James Seery 2349 Exhibit 666, a document bearing Bates Nos. 269

10 JS-LB-BANKR000001 through 7011 Exhibit 667, a document bearing Bates Nos. 33112 HLHZ0011913 with attachment13 Exhibit 668, excerpts from the transcript 37914 of the September 19 hearing1516171819202122232425


Page 397

1 J. Seery2 NAME OF CASE: In re: Lehman Brothers Holdings3 DATE OF DEPOSITION: March 3, 20104 NAME OF WITNESS: James Seery5 Reason Codes:6 1. To clarify the record.

2. To conform to the facts.7 3. To correct transcription errors.8 Page ______ Line ______ Reason ______

From _____________________ to _____________________9


From _____________________ to _____________________12


From _____________________ to _____________________15


From _____________________ to _____________________18


From _____________________ to _____________________21


From _____________________ to _____________________2425 __________________________

A. 162

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EX-99.1 9 a08-22764_5ex99d l.htm EX-99.1Exhibit 99.1

Press ReleaseFor Immediate Release Leman Brothers

Media Contact: Monique Wise1-646-333-9056Mark Lane1-646-333-8247

Barclays CapitalMedia Contact: Leigb Bruce

44 (0)20-7773-7371Peter Truell1-212-412-7576Simon Eaton44 (0) 7917-068-479

Investor Contact: Mark Merson44 (0) 20-7116-5752Jobn Mcivor44 (0) 20-7116-2929

BARCLA YS TO ACQUIRE LEHMAN BROTHERS'

BUSINESSES AND ASSETS

• Barclays Agrees to Acquire Lehman Brothers' North American Investment Banking, and Fixed Income and EquitiesSales, Trading and Research Operations, Including Approximately 10,000 Employees

• Discussions to Acquire Lehman Brothers' Select Operations Outside of North America

• Barclays Agrees to Purchase Lehman Brothers' Headquarters Office Building and Two Other Facilities

• Barclay, Enters into Support Agreement with Lehman Brothers to provide:• $500 Million DIP-Financing to Lehman Brothers HoldIngs Inc.• A Substantial Interim Credit Facility to Lehman Brothers Inc.

London and New York, September 16, 2008 - Barclays Capital, the investment banking division of Barclays Bank PLC (LSE:BARC), has signed a definitive agreement to acquire

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EX-99.1 9 a08-22764 5ex99d 1.htm EX-99.1Exhibit 99.1

Press ReleaseFor Immediate Release Leman Brothers

Media Contact: Monique Wise!-646-333-9056Mark Lane1-646-333-8247

Barclays CapitalMedia Contact: Leigh Bruce

44 (0)20-7773-737 !Peter TruellI-212-412-7576Simon Eaton44 (0) 7917-068-479

Investor Contact: Mark Merson44 (0) 20-7116-5752John Mclvor44 (0) 20-7116-2929

BARCLAYS TO ACQUIRE LEHMAN BROTHERS’

BUSINESSES AND ASSETS

Barclays Agrees to Acquire Lehman Brothers’ North American Investment Banking, and Fixed Income and EquitiesSales, Trading and Research Operations, Including Approximately 10,000 Employees

Discussions to Acquire Lehman Brothers’ Select Operations Outside of North America

¯ Barclays Agrees to Purchase Lehman Brothers’ Headquarters Office Building and Two Other Facilities

¯ Barclays Enters into Support Agreement with Lehman Brothers to provide:¯ $500 Million DIP-Financing to Lehman Brothers Holdings Inc.¯ A Substantial Interim Credit Facility to Lehman Brothers Inc.

London and New York, September 16, 2008- Barclays Capital, the investment banking division of Barclays Bank PLC (LSE:BARC), has signed a definitive agreement to acquire

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substantially all of the North American businesses and operating assets of Lehman Brothers lnc., a wholly-owned subsidiary ofLehman Brothers Holdings Inc. (NYSE: LEH), and certain related assets of Lehman Brothers Holdings Inc. and its affiliates forconsideration consisting of assumed liabilities, $250 million in cash and certain contingent considerations. Barclays also entered into adefinitive agreement to acquire the headquarters of Lehman Brothers, located at 745 Seventh Avenue in New York City, as well as itstwo data centers located in New Jersey for an aggregate of approximately $1.45 billion. The tinal acquisition price of the headquartersand other real estate assets is subject to appraised value.

The businesses to be acquired will include Lehman Brothers' Investment Banking, and Fixed Income and Equities Sales, Trading andResearch operations, as well as certain supporting functions. These operations will be acquired by Barclays Capital, accelerating thegrowth of a formidable player in the global marketplace. Approximately 10,000 employees of Lehman Brothers Inc. and LehmanBrothers Holdings Inc. in North America and certain of its subsidiaries will join Barclays upon the closing of the transactions.

In addition to the agreed transaction, Barclays Capital intends to immediately commence discussions with the relevant internationalregulatory authorities to acquire Lehman Brothers' similar operations outside North America, although there can be no assurancessuch international operations will be acquired.

Barclays Capital also has agreed to provide debtor-in-possession (DIP) financing to Lehman Brothers Holdings Inc. of$500 millionand a substantial interim credit facility to Lehman Brothers Inc. to fund Lehman Brothers Inc.ts ongoing operations. Barclays has alsoentered into an agreement to provide information technology, operational and other support services. These steps ensure LehmanBrothers' continued operations and ability to meet client expectations.

Lehman Brothers Holdings Inc.'s U.S. registered broker-dealers will continue their normal operations.

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substantially all of the North American businesses and operating ~sets of Lehman Brothers Inc., a wholly-owned subsidiary ofLehman Brothers Holdings Inc. (NYSE: LEH), and certain related ~sets of Lehman Brothers Holdings Inc. and its affiliates forconsideration consisting of assumed liabilities, $250 million in cash and certain contingent considerations. Barclays also entered into adefinitive agreement to acquire the headquarters of Lehman Brothers, located at 745 Seventh Avenue in New York City, as well as itst~vo data centers located in New Jersey for an aggregate of approximately $1.45 billion. The final acquisition price of the headquartersand other real estate assets is subject to appraised value.

The businesses to be acquired will include Lehman Brothers’ Investment Banking, and Fixed Income and Equities Sales, Trading andResearch operations, as well as certain supporting functions. These operations will be acquired by Barclays Capital, accelerating thegrowth of a formidable player in the global marketplace. Approximately 10,000 employees of Lehman Brothers Inc. and LehmanBrothers Holdings Inc. in North America and certain of its subsidiaries will join Barclays upon the closing of the transactionsl

In addition to the agreed transaction, Barclays Capital intends to immediately commence discussions with the relevant internationalregulatory authorities to acquire Lehman Brothers’ similar operations outside North America, although there can be no assurancessuch international operations will be acquired.

Barclays Capital also has agreed to provide debtor-in-possession (DIP) financing to Lehman Brothers Holdings Inc. of $500 millionand a substantial interim credit facility to Lehman Brothers Inc. to fund Lehman Brothers Inc.’s ongoing operations. Barclays has alsoentered into an agreement to provide information technology, operational and other support services. These steps ensure LehmanBrothers’ continued operations and ability to meet client expectations.

Lehman Brothers Holdings lnc.’s U.S. registered broker-dealers will continue their normal operations.

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Separately, Lehman Brothers Holdings Inc. is engaged in advanced discussions to sell its Investment Management Division to a thirdparty in an unrelated transaction.

Commenting on this announcement, John Varley, Barclays Group Chief Executive, said, "The proposed acquisition of LehmanBrothers North American investment banking and capital market operations accelerates the execution of our strategy of diversificationby geography and business in pursuit of profitable growth on behalf of our shareholders, in particular increasing the percentage ofBarclays earnings sourced in North America. This transaction delivers the strategic benefits ofa combination with Lehman Brotherscore franchise, whilst meeting Barclays strict financial criteria, and strengthening our capital ratios."

Robert E. Diamond, Jr., Barclays President, said, "This is a once in a lifetime opportunity for Barclays. We will now have the bestteam and most productive culture across the world's major financial markets, backed by the resources of an integrated universal bank.We welcome the opportunity to add Lehman's people and capabilities to the Barclays team."

"This is a wonderful outcome for a great number of our employees that will preserve and strengthen our terrific franchise," saidRichard S. Fuld, Jr., Chairman and Chief Executive Officer of Lehman Brothers.

Bart McDade, Lehman Brothers President and Chief Operating Officer, said, "Lehman Brothers strength has always been our clientfranchise. With this transaction, we have the opportunity to continue the growth and development of our U.S. investment banking andcapital market franchises with one of the leading financial institutions in the world. Together with Barclays, these businesses will be apart of a global financial services powerhouse delivering a comprehensive suite of products and services to our clients."

The transactions have been approved by the Boards of Directors of Barclays Bank PLC, Lehman Brothers Holdings Inc. and LehmanBrothers Inc. No shareholder approvals are required for the transactions.

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Separately, Lehman Brothers Holdings Inc. is engaged in advanced discussions to sell its Investment Management Division to a thirdparty in an unrelated transaction.

Commenting on this announcement, John Varley, Barclays Group Chief Executive, said, "The proposed acquisition of LehmanBrothers North American investment banking and capital market operations accelerates the execution of our strategy of diversificationby geography and business in pursuit of profitable growth on behalf of our shareholders, in particular increasing the percentage ofBarclays earnings sourced in North America. This transaction delivers the strategic benefits of a combination with Lehman Brotherscore franchise, whilst meeting Barclays strict financial criteria, and strengthening our capital ratios."

Robert E. Diamond, Jr., Barclays President, said, "This is a once in a lifetime opportunity for Barclays. We will now have the bestteam and most productive culture across the world’s major financial markets, backed by the resources of an integrated universal bank.We welcome the opportunity to add Lehman’s people and capabilities to the Barclays team."

"This is a wonderful outcome for a great number of our employees that will preserve and strengthen our terrific franchise," saidRichard S. Fuld, Jr., Chairman and Chief Executive Officer of Lehman Brothers.

Bart McDade, Lehman Brothers President and Chief Operating Officer, said, "Lehman Brothers strength has always been our clientfranchise. With this transaction, we have the opportunity to continue the growth and development of our U.S. investment banking andcapital market franchises with one of the leading financial institutions in the world. Together with Barclays, these businesses will be apart of a global financial services powerhouse delivering a comprehensive suite of products and services to our clients."

The transactions have been approved by the Boards of Directors of Barclays Bank PLC, Lehman Brothers Holdings Inc. and LehmanBrothers Inc. No shareholder approvals are required for the transactions.

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The transaction is subject to Bankruptcy Court approval. Lehman Brothers will file an emergency motion with the Bankruptcy Courtfor the Southern District of New York to seek a hearing to approve a break-up fee and related bid procedures and will seek a hearing inthe Bankruptcy Court for later this week to obtain approval of the transaction.

About Barclays Bank PLC

Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking,wealth management and investment management services, with an extensive international presence in Europe, the USA, Africa andAsia.

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs 147,000 people. Barclaysmoves, lends, invests and protects money for over 42 million customers and clients worldwide.

About Barclays Capital

Barclays Capital is the investment banking division of Barclays Bank PLC which has an AA long-term credit rating and a balancesheet of £1.4 trillion. With a distinctive business model, Barclays Capital provides large corporate, government and institutional clientswith solutions to their financing and risk management needs. Barclays Capital has offices around the world, employs over 16,300people and has the global reach and distribution power to meet the needs of issuers and investors worldwide.

About Lehman Brothers

Lehman Brothers (ticker symbol: LEH), an innovator in global finance, serves the financial needs of corporations, governments andmunicipalities, institutional clients and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadershippositions in equity and fixed income sales, trading and research, investment banking, private investment management, assetmanagement and private equity. The Firm is headquartered in New York, with regional headquarters in London and Tokyo, andoperates in a network of offices around the world. For further information about Lehman Brothers' services, products and recruitmentopportunities, visit the Firm's Web site at www.lehman.com.

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The transaction is subject to Bankruptcy Court approval. Lehman Brothers will file an emergency motion with the Bankruptcy Courtfor the Southern District of New York to seek a hearing to approve a break-up fee and related bid procedures and will seek a hearing inthe Bankruptcy Court for later this week to obtain approval of the transaction.

About Barclays Bank PLC

Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking,wealth management and investment management services, with an extensive international presence in Europe, the USA, Africa and

With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs 147,000 people. Barclaysmoves, lends, invests and protects money for over 42 million customers and clients worldwide.

About Barclays Capital

Barclays Capital is the investment banking division of Barclays Bank PLC which has an AA long-term credit rating and a balancesheet of£1.4 trillion. With a distinctive business model, Barclays Capital provides large corporate, government and institutional clientswith solutions to their financing and risk management needs. Barclays Capital has offices around the world, employs over 16,300people and has the global reach and distribution power to meet the needs of issuers and investors worldwide.

About Lehman Brothers

Lehman Brothers (ticker symbol: LEH), an innovator in global finance, serves the financial needs of corporations, governments andmunicipalities, institutional clients and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadershippositions in equity and fixed income sales, trading and research, investment banking, private investment management, assetmanagement and private equity. The Finn is headquartered in New York, with regional headquarters in London and Tokyo, andoperates in a network of offices around the world. For further information about Lehman Brothers’ services, products and recruitmentopportunities, visit the Firm’s Web site at www.lehman.com.

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Analyst and Investor Conference Call

A conference call for analysts and institutional investors will be hosted by John Varley, 8arclays Group Chief Executive and Robert E.Diamond, Jr., 8arclays President. The call will commence at 12.0Opm (8ST) 17 September 2008.

To access the live conference call please dial 0845 401 9092 (UK callers) or +442030234419 (all other locations). Access code:"Barclays Announcement". A live webcast of the conference call will also be available at www.barclays.comiinvestorrelations.

A replay of the conference call and webcast will be available after the event. Access will be available via the 8arclays investorrelations website at the above address.

Forward-looking statements

This announcement contains certain forward-looking statements with respect to certain of8arclays plans and its current goals andexpectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. 8arclayscautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materiallyfrom those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they donot relate only to historical or current facts. Forward-looking statements sometimes use words such as 'aim', 'anticipate', 'target','expect', 'estimate', 'intend', 'plan', 'goal', 'believe', or other words of similar meaning. Examples of forward-looking statementsinclude, among others, statements regarding consummation of the proposed acquisition of the Lehman 8rothers businesses by8arclays within the expected timefrarne and on the expected terms (if at all), the benefits of the proposed acquisition of certain of theLehman Brothers businesses by 8arclays, including the achievement of synergy targets, Barclays future financial position, incomegrowth, impairment charges, business strategy, projected costs, estimates of capital expenditure and revenue benefits, projected levelsof growth in the banking and financial markets, the enlarged group's future financial and operating results, future financial position,projected costs, estimates of capital expenditure, and plans and objectives for future operations of 8 arcl ays and the enlarged group andother statements that are not historical fact.

8y their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances,including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in creditmarkets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental andregulatory authorities, changes in legislation, the further development of standards and interpretations under International FinancialReporting Standards ("IFRS") applicable to past, current and future periods, evolving practices with regard to the interpretation andapplication of standards under [FRS, the outcome of pending and future litigation, the success of future

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Analyst and Investor Conference Call

A conference call for analysts and institutional investors will be hosted by John Varley, Barclays Group Chief Executive and Robert E.Diamond, Jr., Barclays President. The call will commence at 12.00pro (BST) 17 September 2008.

To access the live conference call please dial 0845 401 9092 (UK callers) or +44 20 3023 4419 (all other locations). Access code:"Barclays Announcement". A live webcast of the conference call will also be available at www.barclays.comiinvestorrelations.

A replay of the conference call and webcast will be available after the event. Access will be available via the Barclays investorrelations website at the above address.


This announcement contains certain forward-looking statements with respect to certain of Barclays plans and its current goals andexpectations relating to its future financial condition and performance and which involve a number ofdsks and uncertainties. Barclayscautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materiallyfrom those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they donot relate only to historical or current facts. Forward-looking statements sometimes use words such as ’aim’, ’anticipate’, ’target’,’expect’, ’estimate’, ’intend’, ’plan’, ’goal’, ’believe’, or other words of similar meaning. Examples of forward-looking statementsinclude, among others, statements regarding consummation of the proposed acquisition of the Lehman Brothers businesses byBarclays within the expected timeframe and on the expected terms (if at all), the benefits of the proposed acquisition of certain of theLehman Brothers businesses by Barclays, including the achievement ofsynergy targets, Barclays future financial position, incomegrowth, impairment charges, business strategy, projected costs, estimates of capital expenditure and revenue benefits, projected levelsof growth in the banking and financial markets, the enlarged group’s future financial and operating results, future financial position,projected costs, estimates of capital expenditure, and plans and objectives for future operations of Barclays and the enlarged group andother statements that are not historical fact.

By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances,including, but not limited to, UK domestic and global economic and business conditions, the effects of continued volatility in creditmarkets, market-related risks such as changes in interest rates and exchange rates, the policies and actions of governmental andregulatory authorities, changes in legislation, the further development of standards and interpretations under International FinancialReporting Standards ("IFRS’) applicable to past, current and future periods, evolving practices with regard to the interpretation andapplication of standards under IFRS, the outcome of pending and future litigation, the success of future

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acquisitions and other strategic transactions and the impact of competition - a number of which factors are beyond Barclays control.As a result, Barclays actual future results may differ materially from the plans, goals, and expectations set forth in Barclays forward-looking statements. Any forward-looking statements made herein by or on behalf of Barclays speak only as of the date they are made.Except as required by the FSA, the London Stock Exchange or applicable law, Barclays expressly disclaims any obligation orundertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflectany changes in Barclays expectations with regard thereto or any changes in events, conditions or circumstances on which any suchstatement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documentsit has filed or may file with the SEC.

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acquisitions and other strategic transactions and the impact of competition -- a number of which factors are beyond Barclays control.As a result, Barclays actuai future results may differ materially from the plans, goals, and expectations set forth in Barclays forward-looking statements. Any forward-looking statements made herein by or on behalf of Barclays speak only as of the date they are made.Except as required by the FSA, the London Stock Exchange or applicable law, Barclays expressly disclaims any obligation orundertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflectany changes in Barclays expectations with regard thereto or any changes in events, conditions or circumstances on which any suchstatement is based. The reader should, however, consult any additional disclosures that Barclays has made or may make in documentsit has filed or may file with the SEC.

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A. 163

A. 165

1666336

David S. Rosner (DR-4214)

Andrew K. Glenn (AG-9934)

KASOWITZ, BENSON, TORRES

& FRIEDMAN LLP

1633 Broadway

New York, New York 10019

Telephone: (212) 506-1700

Facsimile: (212) 506-1800

Attorneys for Bay Harbour Management L.C., Bay Harbour Master Ltd.,

Trophy Hunter Investments, Ltd., BHCO Master, Ltd.,

MSS Distressed & Opportunities 2 and Institutional Benchmarks

UNITED STATES BANKRUPTCY COURT


___________________________________________

In re: :

: Chapter 11

LEHMAN BROTHERS HOLDINGS, INC, et al. :

: Case No. 08-13555 (JMP)

Debtor. :

: (Jointly Administered)

__________________________________________:

SECURITIES INVESTOR PROTECTION :

CORPORATION :

Plaintiff :

: Adversary Proceeding Nos.

v. :

: 08-01419 (JMP)

LEHMAN BROTHERS INC., : 08-01420 (JMP)

:

Debtor. :

__________________________________________:

DESIGNATION OF RECORD AND STATEMENT OF ISSUES PRESENTED ON

APPEAL OF BAY HARBOUR MANAGEMENT L.C., BAY HARBOUR MASTER

LTD., TROPHY HUNTER INVESTMENTS, LTD., BHCO MASTER, LTD., MSS

DISTRESSED & OPPORTUNITIES 2 AND INSTITUTIONAL BENCHMARKS FROM

ORDERS OF THE BANKRUPTCY COURT ENTERED SEPTEMBER 20, 2008

Bay Harbour Management L.C., Bay Harbour Master Ltd., Trophy Hunter Investments,

Ltd., BHCO Master, Ltd., MSS Distressed & Opportunities 2 and Institutional Benchmarks

(collectively, “Bay Harbour”), pursuant to Federal Rule of Bankruptcy Procedure 8006, hereby

designate the record and issues presented on appeal to the United States District Court for the

Southern District of New York from the following orders (the “Orders”) entered by the United

2

States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in the

above-referenced chapter 11 cases on September 20, 2008:

(i) Order Under 11 §§ U.S.C. 105(a), 363, and 365 and Federal Rules of Bankruptcy

Procedure 2002, 6004 and 6006 Authorizing and Approving (A) the Sale of Purchased Assets

Free and Clear of Liens and Other Interests and (B) Assumption and Assignment of Executory

Contracts and Unexpired Leases in Case No. 08-13555 (JMP);

(ii) Order Approving, and Incorporating by Reference for the Purposes of this

Proceeding, an Order Authorizing the Sale of Purchased Assets and Other Relief in the Lehman

Brothers Holdings, Inc. Chapter 11 Proceeding in each of Case Nos. 08-01419 and 08-01420

(JMP).

Statement of Issues Presented on Appeal

1. Whether the Bankruptcy Court erred in its conclusion in the Orders that Barclays

Capital, Inc. ("Barclays") was a purchaser in good faith pursuant to section 363 of title 11,

United States Code (the "Bankruptcy Code").

2. Whether the Bankruptcy Court erred in its conclusion in the Orders that the sale

pursuant to the Orders complied with the Due Process clause of the Fifth Amendment of the

United States Constitution where there was no ability for the Court and for parties in interest,

including Appellants, to determine whether Barclays was a purchaser in good faith pursuant to

section 363 of the Bankruptcy Code.

3. Whether the Bankruptcy Court erred in approving a sale free and clear of

liabilities to Barclays, an entity that the Bankruptcy Court could not have concluded to be a

purchaser in good faith under section 363 of the Bankruptcy Code.

3

Designation of Items to Be Included in the Record on Appeal

Documents Filed in Case No. 08-13555 (JMP)

1. Debtors’ Motion To (A) Schedule a Sale Hearing, (B) Establish Sale Procedures,

(C) Approve a Break-Up Fee; And (D) Approve The Sale Of The Purchased

Assets And The Assumption And Assignment Of Contracts Relating To The

Purchased Assets, filed September 17, 2008 [Docket No. 60]

2. Objection of Bay Harbour Management L.C., Bay Harbour Master Ltd., Trophy

Hunter Investments Ltd., BHCO Master, Ltd., MSS Distressed & Opportunities 2

and Institutional Benchmarks to the Debtors' Motion to (A) Schedule a Sale

Hearing, (B) Establish Sale Procedures, (C) Approve a Break-up Fee; and (D)

Approve the Sale of the Purchased Assets and the Assumption and Assignment of

Contracts Relating to the Purchased Assets, filed September 19, 2008 [Docket No.

175]

3. Limited Objection of SuccessFactors, Inc. to Debtors' Motion Seeking, Among

Other Things, an Order Authorizing and Approving the Assumption and

Assignment of Certain Executory Contracts and Unexpired Leases, filed

September 19, 2008 [Docket No. 254]

4. Limited Objection of Cisco Systems, Inc. and Cisco Systems Capital Corporation

to Debtors' Motion Seeking, Among Other Things, an Order Authorizing and

Approving the Assumption and Assignment of Certain Executory Contracts and

Unexpired Leases, filed September 19, 2008 [Docket No. 251]

5. Objection by Murex North America Inc. to Debtors' Cure Notice, filed September

19, 2008 [Docket No. 250]

6. Limited Objection of Sun Microsystems, Inc. to Debtors' Motion Seeking, Among

Other Things, an Order Authorizing and Approving the Assumption and

Assignment of Certain Executory Contracts and Unexpired Leases, filed


7. Reservation of Rights and Limited Objection of Chevron Natural Gas to Debtors'

Motion to Approve the Sale of the Purchased Assets and the Assumption and

Assignment of Contracts Relating to the Purchased Assets, filed September 19,

2008 [Docket No. 245]

8. Objection of Chicago Board Options Exchange, Incorporated, Objection to

Debtors’ Cure Amount, filed September 19, 2008 [Docket No. 235]

9. LiquidPoint, LLC's Reservation of Rights and Limited Objection to Assumption

and Assignment of Contracts and Proposed Cure Amounts, filed September 19,

2008 [Docket No. 228]

4

10. Response of the Joint Administrators of the Lehman European Group

Administration Companies to Debtors' Motion to (A) Schedule A Sale Hearing;

(B) Establish Sales Procedures; (C) Approve A Break-Up Fee; and (D) Approve

the Sale of the Purchased Assets and the Assumption and Assignment of Contracts

Relating to the Purchased Assets, filed September 19, 2008 [Docket No. 219]

11. Declaration of Dan Yoram Schwarzmann on behalf of The Joint Administrators of

the Lehman European Group Administration Companies, filed September 19,

2008 [Docket No. 223]

12. International Business Machines Corporation's Statement and Limited Objection

to Debtors’ Motion to (A) Schedule a Sale Hearing; (B) Establish Sales

Procedures; (C) Approve a Break-Up Fee; and (D) Approve the Sale of the

Purchased Assets and the Assumption and Assignment of Contracts Relating to the


13. Objection to Assumption and Assignment of, and Amounts Necessary to Cure

Defaults Under Contracts and Leases to be Assumed and Assigned to Successful

Purchaser, filed September 19, 2008 [Docket No. 218]

14. Moody's Corporation's Statement and Limited Objection to Debtors’ Motion to

(A) Schedule a Sale Hearing; (B) Establish Sales Procedures; (C) Approve a

Break-Up Fee; and (D) Approve the Sale of the Purchased Assets and the

Assumption and Assignment of Contracts Relating to Purchased Assets, filed


15. Limited Objection of Keane, Inc. to Debtors' Cure Notice, filed September 19,

2008 [Docket No. 213]

16. Reservation of Rights and Limited Objection of NPD Group, Inc. to Debtors'

Motion to Approve the Sale of the Purchased Assets and the Assumption and


2008 [Docket No. 211]

17. Community Trust Bancorp Inc.'s Objection to Debtors’ Motion to Approve the

Sale of the Purchased Assets and the Assumption and Assignment of Contracts


18. Objection to Sale Motion, filed September 19, 2008 [Docket No. 209]

19. Limited Objection and Reservation of Rights of Dresdner Kleinwort Group

Holdings LLC to Debtors' Motion to Approve the Sale of Purchased Assets and

Assumption and Assignment of Contracts Relating to the Purchased Assets, filed


20. Objection of IKON Office Solutions, Inc. to Debtors' Motion to (A) Schedule A

Sale Hearing; (B) Establish Sales Procedures; (C) Approve a Break-up Fee; and

(D) Approve the Sale of the Purchased Assets and the Assumption and


2008 [Docket No. 207]

5

21. Limited Objection and Reservations of Rights of ICAP to Debtors' Motion to (A)

Schedule a Sale Hearing; (B) Establish Sales Procedures; (C) Approve a Break-Up

Fee; and (D) Approve the Sale of the Purchased Assets and the Assumption and

Assignment of Contracts relating to Purchased Assets, filed September 19, 2008

[Docket No. 206]

22. Limited Objection of FMR LLC to Proposed Cure Amounts and Assumption and

Assignment of Executory Contracts, filed September 19, 2008 [Docket No. 204]

23. Reservation of Rights and Objection of EMC Corporation, its Subsidiaries and

Affiliates to Debtors' Motion to Approve the Sale of the Purchased Assets and the



24. Limited Objection of Misys IQ LLC and Summit Systems, Inc. to Debtors' Cure

Notice, filed September 19, 2008 [Docket No. 199]

25. Objection of GE Capital Information Technology Solutions, Inc. d/b/a IKON

Financial Services to Debtors' Motion to (A) Schedule a Sale Hearing; (B)

Establish Sales Procedures; (C) Approve a Break-Up Fee; and (D) Approve the

Sale of the Purchased Assets and the Assumption and Assignment of Contracts


26. Limited Objection of JPMorgan Chase Bank, N.A. to Debtor’s Motion to Approve

the Sale of the Purchased Assets and the Assumption and Assignment of the


197]

27. Limited Objection of Capgemini Financial Services USA, Inc. to Debtors' (I)

Notice of Assumption and Assignment of, and Amounts Necessary to Cure

Defaults under Contracts and Leases to be Assumed and Assigned to Successful

Purchaser and (II) Cure Notice, filed September 19, 2008 [Docket No.195]

28. Objection of Lewtan Technologies, Inc. to Proposed Cure Amounts, filed


29. Limited Objection to Proposed Cure Amount Under Notice of Assumption and

Assignment of, and Amounts Necessary to Cure Defaults Under Contracts and

Leases to be Assumed and Assigned to Successful Purchaser, filed September 19,

2008 [Docket No.193]

30. Objection of ThruPoint, Inc. to Debtors’ Proposed Cure Amount for Assumption

and assignment of Contracts and Leases, filed September 19, 2008 [Docket No.

192]

31. Cure Amount Objection and Reservation of Rights of Thomson Reuters PLC and

Thomson Reuters Corporation With Respect to Debtors' Motion to (A) Schedule a

Sale Hearing; (B) Establish Sales Procedures; (C) Approve a Break-Up Fee; and


6


2008 [Docket No. 191]

32. Reservation of Rights and Objection of Dun & Bradstreet to Debtors' Motion to



189]

33. Limited Objection and Reservation of Rights of Main Street Natural Gas, Inc. to

Debtors' Motion to (A) Schedule a Sale Hearing; (B) Establish Sales Procedures;

(C) Approve a Break-Up Fee and (D) Approve the Sale of the Purchase Assets and

the Assumption and Assignment of Contracts Relating to the Purchased Assets,

filed September 19, 2008 [Docket No. 188]

34. Limited Objection and Reservation of Rights to Debtors' Motion to Approve the

Sale of Purchased Assets and the Assumption and Assignment of Contracts


35. Objection to Assumption and Assignment of, and Amounts Necessary to Cure

Defaults Under Contracts and Leases to be Assumed and Assigned to Successful


36. Reservation of Rights and Limited Objection of the Chicago Mercantile Exchange

to Debtors' Motion to Approve the Sale of the Purchased Assets and the



37. Protective Objection to, and Reservation of Rights Regarding, (I) Sale Motion

(Docket No. 60), (II) Proposed Assumption and Assignment of contracts, and (III)

Proposed Cure Amounts in connection Therewith, filed September 19, 2008

[Docket No. 184]

38. Conditional Objection and Reservation of Rights by Microsoft re Assumption,

Assignment and Cure, filed September 19, 2008 [Docket No.182]

39. Objection of Reliance Globalcom Services, Inc. (f/k/a Yipes Enterprise Services,

Inc.) to the Notice of Assumption and Assignment of, and Amounts Necessary to

Cure Defaults Under Contracts to be Assumed and Assigned to Successful


40. Objection of GLG Partners LP to the Debtors' Motion to Approve the Sale of the



41. Meridian Comp of New York, Inc. D/B/A CHD Meridian Healthcare’s Limited

Objection and Reservation of Rights to Cure Cost, filed September 19, 2008

[Docket No. 178]

42. Objection of the Informal LBHI Bondholder Group to the Debtors' Motion to (A)

Schedule a Sale Hearing; (B) Establish Sales Procedures; (C) Approve a Break-Up

7



2008 [Docket No. 177]

43. Limited Objection of Wells Fargo Bank, N.A. and Wells Fargo & Co. to the

Motion of the Debtors for an Order Approving the Sale of Certain Assets to

Barclays Capital Inc., filed September 19, 2008 [Docket No. 176]

44. Limited Objection of NetApp, Inc. and Network Appliance Limited to Debtors'

Motion Seeking, Among Other Things, an Order Authorizing and Approving the

Assumption and Assignment of Certain Executory Contracts and Unexpired

Leases, filed September 19, 2008 [Docket No. 257]

45. Limited Objection of HWA 555 Owners, LLC to Proposed Cure Amounts and

Assumption and Assignment of Lease, filed September 19, 2008 [Docket No. 173]

46. Reservation of Rights and Limited Objection of Training The Street, Inc. to

Debtors' Motion to Approve the Sale of the Purchased Assets and the Assumption

and Assignment of Contracts Relating to the Purchased Assets, filed September

19, 2008 [Docket No. 172]

47. Limited Objection and Reservation of Rights of 1301 Properties Owner, LP to

Debtor's Motion to Sell Assets and Notice of Assumption and Assignment of, and

Amounts Necessary to Cure Defaults Under, Contracts and Leases to Be Assumed

and Assigned to Successful Purchaser, filed September 19, 2008 [Docket No. 171]

48. Objection of FX Alliance, LLC and its Affiliates and Subsidiaries to Debtors' Cure

Notice, filed September 19, 2008 [Docket No. 170]

49. Reservation of Rights and Limited Objection of Hilliard Farber & Co., Inc. to



19, 2008 [Docket No. 168]

50. Limited Objection of Bloomberg L.P. and Bloomberg Finance L.P. to the Debtors'

Motion to: (A) Schedule a Sale Hearing; (B) Establish Sales Procedures; (C)

Approve a Break-Up Fee; and (D) Approve the Sale of the Purchased Assets and



51. Objection of Avaya Inc. to Debtors' Notice Of Assumption and Assignment of,

and Amounts Necessary to Cure Defaults Under Contracts and Leases to be

Assumed and Assigned To Successful Purchaser, filed September 19, 2008

[Docket No.163]

52. Fannie Mae's Limited Objection to Debtors’ Motion to (A) Schedule a Sale

Hearing; (B) Establish Sales Procedures; (C) Approve a Break Up Fee; and (D)


Contracts Relating to the Purchased Assets [D.I. # 60], filed September 19, 2008

[Docket No. 162]

8

53. Limited Objection and Reservation of Rights of Ad Hoc Committee of

Bondholders to the Debtors' Motion to: (A) Schedule a Sale Hearing; (B) Establish

Sales Procedures; (C) Approve a Break-Up Fee; and (D) Approve the Sale of the



54. Limited Objection and Reservation of Rights of IntraLinks, Inc. to the Debtors'

Motion to: (A) Schedule a Sale Hearing; (B) Establish Sales Procedures; (C)

Approve a Break-Up Fee; and (D) Approve the Sale of the Purchased Assets and



55. Limited Objection of Diversified Credit Investments LLC as Agent for the

Government of Singapore Investment Corporation PTE, Ltd., to Debtors’ Motion

to (A) Schedule a Sale Hearing; (B) Establish Sales Procedures; (C) Approve a

Break-Up Fee; and (D) Approve the Sale of the Purchased Assets and the



56. AT&T Companies' Limited Objection to Debtors' Motion to (A) Schedule a Sale

Hearing; (B) Establish Sales Procedures; (C) Approve a Break-Up Fee; and (D)



158]

57. Limited Objection of DCI Umbrella Fund PLC, an Umbrella Fund with

Segregated Liability Sub-Funds, on Behalf of Diversified Credit Investment Fund

One to Debtors’ Motion to (A) Schedule a Sale Hearing; (B) Establish Sales

Procedures; (C) Approve a Break-Up Fee; and (D) Approve the Sale of the



58. Iron Mountain Information Management, Inc.'s Reservation of Rights and Limited

Objection to Assumption and Assignment of Contracts and Proposed Cure

Amounts, filed September 19, 2008 [Docket No. 122]

59. Objection by ABM Industries, Inc., Requesting Segregation of Sales Proceeds

Pending an Allocation Hearing, filed September 19, 2008 [Docket No. 151]

60. Objection by Northgate Minerals Corporation Requesting Segregation of Sales

Proceeds Pending an Allocation Hearing, filed September 19, 2008 [Docket No.

146]

61. Limited Objection to Proposed Cure Amount and Response of Structure Tone Inc.

to Debtors' Motion Seeking, Among Other Things, an Order Authorizing and

Approving (A) the Sale of Purchased Assets Free and Clear of Liens and Other

Interests and (B) the Assumption and Assignment of Certain Executory Contracts

and Unexpired Leases, filed September 19, 2008 [Docket No. 145]

9

62. Objection by 4Kids Entertainment Inc. Requesting Segregation of Sales Proceeds

Pending an Allocation Hearing, filed September 19, 2008 [Docket No. 140]

63. Objection by Essex Equity Holdings USA, LLC. M. Brian Maher & Basil Maher

Requesting Segregation of Sales Proceeds Pending an Allocation Hearing, filed


64. Objection Of Amber Capital Investment Management to the Debtors' Motion To



132]

65. Limited Objection of Elliott Entities to Motion to Approve Sale, filed September

19, 2008 [Docket No. 130]

66. Reservation of Rights and Limited Objection of Henegan Construction Co., Inc. to



19, 2008 [Docket No.126]

67. Limited Objection of BATS Holdings, Inc. to Motion to (A) Schedule a Sale

Hearing; (B) Establish Sale Procedures; (C) Approve a Break-Up Fee; and (D)


Contracts Related to the Purchased Assets, filed September 19, 2008 [Docket No.

124]

68. Supplement to Limited Objection of BATS Holdings, Inc. to Motion to (A)

Schedule a Sale Hearing; (B) Establish Sale Procedures; (C) Approve a Break-Up-


Assignment of Contracts Related to the Purchased Assets, filed September 19,

2008 [Docket No. 154]

69. Objection of the Wholly-Owned Subsidiaries of Verizon Communications Inc. to

Debtors Cure Notice, filed September 19, 2008 [Docket No. 118]

70. TransCanada Pipelines Limited's and Certain Affiliates' Limited Objection to

Debtors’ Motion to (A) Schedule a Sale Hearing; (B) Establish Sales Procedures;

(C) Approve a Break-Up Fee; and (D) Approve the Sale of the Purchased Assets

and the Assumption and Assignment of Contracts Relating to the Purchased

Assets, filed September 18, 2008 [Docket No. 116]

71. Objection of Overstock.com, Inc., and Certain Current or Former Shareholders

Thereof, and Certain Current or Former Shareholders of Novastar Financial, Inc.,

to Debtors' Motion to (A) Schedule a Sale Hearing; (B) Establish Sale Procedures;

(C) Approve a Break-Up Fee; and (D) Approve The Sale of the Purchased Assets



72. Limited Objection and Reservation of Rights of SP4 190 S. LaSalle, L.P. to

Debtors' Motion to (A) Schedule a Sale Hearing; (B) Establish Sales Procedures;

10

(C) Approve a Break-Up Fee; and (D) Approve the Sale of the Purchased Assets



73. Occidental Energy Marketing, Inc.'s Objection to Debtors’ Motion to (A) Schedule

a Sale Hearing; (B) Establish Sales Procedures; (C) Approve a Break-Up Fee; and



2008 [Docket No. 98]

74. Order Under 11 U.S.C. §§ 105(a), 363, and 365 and Federal Rules of Bankruptcy

Procedure 2002, 6004 and 6006 Authorizing and Approving (A) the Sale of

Purchased Assets Free and Clear of Liens and Other Interests and (B) Assumption

and Assignment of Executory Contracts and Unexpired Leases, entered September

20, 2008 [Docket No. 258]

75. Notice of Appeal, filed September 21, 2008 [Docket No. 261]

76. Notice of Appeal, as corrected, filed September 22, 208 [Docket No. 262]

77. Asset Purchase Agreement Among Lehman Brothers Holdings, Inc., Lehman

Brothers Inc., LB 745 LLC, and Barclays Capital Inc., dated as of September 16,

2008 [Docket No. 280]

78. First Amendment to Asset Purchase Agreement, dated as of September 19, 2008

[Docket No. 280]


79. Trustee’s Application for Entry of an Order Approving, and Incorporating by

Reference for the Purposes of this Proceeding, an Order Authorizing the Sale of

Purchased Assets and Other Relief in the Lehman Brothers Holdings, Inc. Chapter

11 Proceeding, filed September 19, 2008 [Docket No. 4]

80. Order Approving, and Incorporating by Reference for the Purposes of this

Proceeding, an Order Authorizing the Sale of Purchased Assets and Other Relief

in the Lehman Brothers Holdings, Inc. Chapter 11 Proceeding, entered September

20, 2008 [Docket No. 2]



82. Trustee’s Application for Entry of an Order Approving, and Incorporating by

Reference for the Purposes of this Proceeding, an Order Authorizing the Sale of

Purchased Assets and Other Relief in the Lehman Brothers Holdings, Inc. Chapter

11 Proceeding, filed September 19, 2008 [Docket No. 2]

11

83. Order Approving, and Incorporating by Reference for the Purposes of this

Proceeding, an Order Authorizing the Sale of Purchased Assets and Other Relief

in the Lehman Brothers Holdings, Inc. Chapter 11 Proceeding, entered September

20, 2008 [Docket No. 3]


Transcript

85. Transcript of Proceeding before the Bankruptcy Court on September 19-20, 2008.

[Docket No. 352]

86. Transcript of Proceeding before the Bankruptcy Court on September 17, 2008.

[Docket No. 318]

Date: October 1, 2008

New York, New York

By: /s/ David S. Rosner

David S. Rosner (DR-4214)

Andrew K. Glenn (AG-9934)

KASOWITZ, BENSON, TORRES

& FRIEDMAN LLP

1633 Broadway

New York, New York 10019

Telephone: (212) 506-1700

Facsimile: (212) 506-1800

Attorneys for Bay Harbour Management L.C.,

Bay Harbour Master Ltd., Trophy Hunter

Investments, Ltd., BHCO Master, Ltd., MSS

Distressed & Opportunities 2 and Institutional

Benchmarks

A. 166

Hearing Date and Time: June 3, 2009 at 10:00 a.m. Objection Deadline: May 29, 2009 at 4:00 p.m.

JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 Robert W. Gaffey William J. Hine Jayant W. Tambe Benjamin Rosenblum Attorneys for Debtor and Debtor in Possession

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------- In re: LEHMAN BROTHERS HOLDINGS INC., et al., Debtors. ---------------------------------------------------------------

x : : : : : : : x


MOTION OF DEBTOR AND DEBTOR IN POSSESSION FOR AN ORDER, PURSUANT TO FED. R. BANKR. P. 2004, AUTHORIZING

DISCOVERY FROM BARCLAYS CAPITAL, INC.

TO THE HONORABLE JAMES M. PECK, UNITED STATES BANKRUPTCY JUDGE:

Lehman Brothers Holdings Inc. (“LBHI” or the “Debtor” and, collectively with

its debtor and non-debtor affiliates, “Lehman”), by and through its undersigned counsel, hereby

moves for entry of an order pursuant to Federal Rule of Bankruptcy Procedure 2004, authorizing

it to conduct certain discovery against Barclays Capital, Inc. (“Barclays”).

PRELIMINARY STATEMENT

1. The Debtor hereby seeks authority to conduct focused discovery against

Barclays concerning matters of importance to the estate and its creditors. As explained below,

2

Barclays was the purchaser of substantially all of Lehman’s North American broker-dealer assets

in a sale transaction negotiated, approved and executed within the span of a few days

immediately following LBHI’s filing for bankruptcy (the “Sale Transaction”). The requested

discovery relates to that highly expedited transaction, and related matters, and is specifically

focused on whether the estate received appropriate value.

2. Since the completion of this expedited negotiation and sale of one of the

largest investment banks in the world, the Debtor has become aware of apparent material

discrepancies relating to the liabilities Barclays was to assume and the benefits LBHI (or related

entities) was to receive under this and related transactions. As noted below, these apparent

discrepancies concern, inter alia, Barclays’ obligation to pay employee bonuses and certain

contract cure amounts (both of which materially impacted the value of the sale) as well as to

certain asset transfers related to repurchase transactions conducted during the week the Sale

Transaction was negotiated. In the aggregate, these apparent discrepancies may have resulted in

a windfall to Barclays at the expense of the estate, its creditors and other parties in interest, in an

amount that could reach into the billions of dollars. As a result, the Debtor now seeks discovery

from Barclays to enable the estate to properly review these issues and determine Debtor’s rights

and obligations (and to assess whether it may have claims) under these transactions.

FACTUAL BACKGROUND

A. The Bankruptcy Proceeding(s)

3. Starting on September 15, 2008 and periodically thereafter, LBHI and

certain of its subsidiaries (collectively, the “Debtors”) commenced in this Court voluntary cases

under chapter 11 of title 11 of the United States Code (“Bankruptcy Code”). The Debtors’

chapter 11 cases have been consolidated for procedural purposes and are being jointly

3

administered pursuant to Bankruptcy Rule 1015(b). The Debtors are authorized to operate their

businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and

1108 of the Bankruptcy Code.

4. On September 17, 2008, the U.S. Trustee appointed the statutory

committee of unsecured creditors pursuant to Section 1102 of the Bankruptcy Code (the

“Creditors’ Committee”). The Debtor understands that the Creditors’ Committee may also be

looking into some of the concerns that have prompted this motion.

5. On September 19, 2008, a proceeding was commenced under the

Securities Investor Protection Act of 1970 (“SIPA”) with respect to Lehman Brothers Inc.

(“LBI”). A trustee appointed under SIPA is administering LBI’s estate.

6. This Court has subject matter jurisdiction to consider and determine this

matter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b).

Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

B. The LBHI-Barclays Sale Transaction

7. Before LBHI’s bankruptcy filing, Barclays had discussed with Lehman a

possible acquisition of all its assets, but no transaction was consummated. Just a few hours after

LBHI filed for bankruptcy, however, Barclays approached representatives of Lehman seeking to

purchase its North American broker-dealer operations. Barclays, LBHI and LB 745 LLC (the

Lehman entity that owned the real estate assets being sold) then negotiated this post-bankruptcy

sale very quickly as the market value of the LBHI assets in question was declining by many

millions of dollars every day. Within one day, LBHI, LB 745 LLC and Barclays came to an

agreement on the terms of the contemplated sale and their agreement was embodied in an Asset

Purchase Agreement, dated September 16, 2009 (the “APA”)).

4

8. The next morning, September 17, 2008, LBHI and LB 745 LLC filed a

motion seeking Court approval for the sale (the “Sale Motion”). On the afternoon of September

17, 2009, the Court heard argument on preliminary motions filed by the Debtors, at which

hearing the purported value of the proposed Sale Transaction was first presented to the Court in

connection with its approval of Barclays’ break-up fee. Two days later, on September 19, 2009,

the Court held a hearing on the Sale Motion, during which the terms of the proposed transaction

and the need for expedited approval of same were further described to the Court and to creditors

of the estate.

9. Among other things, the Court was told at these hearings that, as part of

the value given by Barclays in the transaction, Barclays would assume in the aggregate $2 billion

in liabilities to pay bonus compensation to Lehman employees who transferred to Barclays and

would also assume approximately $1.5 billion in contract cure costs. (See, e.g., 9/19/08 Hearing

Tr. at 100:22-25 (employee compensation); id. at 101:1-4 (cure costs); 9/17/08 Hearing Tr. at

23:5-24:8 (cure costs)) In the hearings related to the Sale Transaction, the Court took these

assumed liabilities, in full, into account in assessing the value of the transaction to the estate.

(9/17/08 Hearing Tr. at 23:5-24:8) Ultimately, based on the record before it, the Court found

that these assumptions of liabilities by Barclays were integral to the Purchase Agreement. (Sale

Order at 10)

10. Barclays’ assumption of billions of dollars in liabilities for bonus

compensation and contract cures was a critical component of the consideration Barclays was to

give in the Sale Transaction in return for the Debtors’ assets, but it appears that these assumed

liabilities were significantly overstated or inaccurate and, further, that Barclays may not have

actually paid these obligations. This raises serious questions regarding whether Barclays’

5

purported assumption of up to $4.25 billion in liabilities, an integral component of the Sale

Transaction, was genuine, adequate and fair consideration for the asset purchase as approved by

the Court. Moreover, it appears that Barclays’ assumption of these liabilities may have been

illusory, in that billions of dollars of Lehman assets were transferred to Barclays in connection

with certain repurchase agreements not addressed in the Purchase Agreement, which effectively

nullified the liabilities Barclays purported to assume under the Purchase Agreement.

11. In the Sale Motion and at the September 19 hearing, the Debtor explained

the unusual circumstances surrounding the proposed Sale Transaction – in particular, the fact that

time was “of the essence” because its assets were losing many millions of dollars in value on a

daily basis. (Sale Motion ¶¶ 6-13; 9/19/08 Hearing Tr. at 244:17-24) In light of these “exigent

circumstances” and the “wasting nature” of the assets, this Court approved the Sale Transaction

on a highly expedited basis with little chance for creditors or anyone else to thoroughly review

the deal. (See Sale Order ¶¶ C and D)

12. Accordingly, on September 20, 2008, the Court entered an order (the “Sale

Order”) approving the Sale Transaction, including the assumed liabilities. The APA

subsequently was modified by a First Amendment Clarifying Asset Purchase Agreement, dated

as of September 19, 2008 (“First Amendment”), and a letter agreement dated as of September 20,

2008 (the “Clarifying Letter,” collectively with the APA and First Amendment, the “Purchase

Agreement”).

C. Newly Uncovered Apparent Discrepancies

13. The Sale Transaction closed on Monday, September 22, 2008. Since then,

the Debtor has become aware of certain apparent discrepancies involving the terms of the Sale

Transaction.

6

14. In short, this Bankruptcy Rule 2004 motion seeks information concerning

three key aspects of the parties’ dealings in connection with this unprecedented sale.

15. First, the Purchase Agreement provided that Barclays would pay employee

bonuses (accrued as of August 31, 2008) for Lehman employees who transferred to Barclays.

Section 9.1(c) of the Purchase Agreement referenced, but did not attach, a certain “financial

schedule delivered to” Barclays on September 16, 2008. A copy of such schedule appears to

show the accrual amount for employee compensation to have been $2.0 billion. (Copy annexed

as Exhibit A) Barclays’ assumption of this liability was presented to and relied upon by the

Court as an integral component in the value of the transaction and portrayed as such by the Court

in connection with its approval of the Barclays’ proposed break-up fee (in comparison to the

notional value of the transaction) as well as its issuance of the Sale Order. (See, e.g., 9/17/08

Hearing Tr. at 23:5-24:8; 9/19/08 Hearing Tr. at 100:22-25). Under Section 9.1(c) of the

Purchase Agreement, Barclays obligation to pay these bonuses, in the stated accrued amount,

was mandatory. The Debtor has attempted to conduct a preliminary review of this issue but has

no information as to the bonuses Barclays has actually paid to former Lehman employees.

Moreover, it appears that the expenses on Lehman’s books for up to August 2008 for the

transferred employees (reflecting the cash, not the equity, component of bonuses) was in the

range of $600-700 million, which is substantially less than the $2-2.5 billion amounts considered

by the Court for 2008 bonuses. (See id.)

16. If there is, in fact, a large discrepancy between what Barclays paid and

what the Court considered, understanding and reconciling such discrepancy is of critical

importance to the Debtor and its stakeholders as it goes directly to the value the estate received

in the Sale Transaction. In the Sale Transaction, as part of the overall consideration Barclays

7

was to have given, Barclays was given credit for the assumption of a $2 billion obligation to

transferred Lehman employees. Exclusive of amounts paid for real estate, and the alleged

“credits” for compensation and cure amounts, Barclays paid only $250 million in cash for

virtually all of Lehman’s North American broker/dealer businesses. If, in fact, the accrual for

bonuses was overstated, or Barclays has paid less than its full obligation, it is possible there may

be claims the estate should assert to recover the difference and further investigation is warranted

to determine if that is so.

17. Second, this Court’s approval of the Sale Transaction was premised on

Barclays’ undertaking an obligation to pay certain contract “cure” amounts described as being in

the range of $1.5-$2.25 billion. The above-referenced financial statement listed the accrual for

such “cures” at $2.25 billion (see Exhibit A hereto), although for some reason (not yet clear to

the Debtor) a $1.5 billion figure was presented to the Court during the Sale Motion. (See 9/19/08

Hearing Tr. at 101:1-4; see also 9/17/09 Hearing Tr. at 23:5-24:8) Either way, there appears to

be a large discrepancy between these stated amounts and the actual “cure” costs ultimately paid

by Barclays. Indeed, the closing date contract cure amounts publicly posted on September 19th

and October 1st were in the range of only $100-$200 million. And based on Debtor’s

preliminary analysis it appears that Barclays has paid slightly more than $200 million (as of

2/24/09) in contract cure costs. The requested discovery seeks information relating to this

apparent material discrepancy concerning the consideration Barclays was to have given in the

Sale Transaction.

18. Third, there appear to be several issues arising from certain repurchase

agreements entered into between LBI and Barclays and related matters. The Debtor is now

conducting a preliminary review of the assets and liabilities transferred to Barclays under these

8

agreements or related arrangements, including (i) billions of dollars worth of collateral

transferred pursuant to a certain repurchase transaction between Barclays and LBI on September

18, 2008, (ii) assets transferred upon the closing of the Purchase Agreement, and (iii) assets

transferred pursuant to the December 5, 2008 Settlement Agreement between JPMorgan Chase

Bank N.A., Barclays, and LBI’s Trustee in the SIPA liquidation. This review seeks to determine

what assets were transferred, whether the Debtor received fair consideration for the assets, and

whether the assets transferred in connection with the repurchase agreements were, in fact,

improperly transferred to offset the liabilities Barclays assumed as part of the consideration it

gave in the Sale Transaction. Reconciling potential discrepancies related to these transfers is

important to the Debtor and its stakeholders, and the requested discovery is needed to allow for a

complete review of these complex transactions.

19. The apparent large size of these discrepancies appears more troubling to

the Debtor when considered in connection with Barclays’ recent announcement of its financial

results for the year ending December 31, 2008. In that regard, Barclays announced that it had

secured a £2.262 billion gain from its acquisition of Lehman’s North American business, just

over two months after closing the Sale Transaction (and during a period when the global

economy was essentially frozen), suggesting that excess assets may have been given to Barclays.

20. In addition to documents concerning the matters described above, the

Debtor also will have a need to take testimony from certain former Lehman executives who are

now employed by Barclays and thus unavailable to the Debtor. These executives include, but are

not limited to, persons who were involved in the negotiations of the Sale Transaction and/or

persons the Debtor understands may have negotiated lucrative bonus agreements with Barclays

before the transaction closed.

9

D. Barclays Will Not Voluntarily Provide This Information

21. The Debtor has tried to get Barclays to provide voluntarily the information

sought in this motion but without success.

22. On February 19, 2009, the Debtor sent to Barclays a letter requesting

information about these employee bonus and contract cure issues. (Copy annexed as Exhibit B)

23. Initially, Barclays responded with a letter that, among other things,

suggested the Debtor should wait until other, possibly similar, inquiries were conducted. (See

Exhibit B)

24. The Debtor retained (subject to Court approval) special counsel to look

into these issues, but its attempts to obtain documents have also been rebuffed.

25. On April 13, 2009, Debtor’s special counsel wrote to Barclays counsel

requesting specific documents. (Copy annexed as Exhibit C)

26. Through its attorneys, inter alia, Barclays demanded that the Debtors’

inquiries must “not duplicate the Examiner’s work.” (Copy annexed as Exhibit D)

27. In subsequent correspondence on April 24, and at a meeting on May 7,

2009, Debtor’s special counsel offered cooperation in trying to avoid excess burden and

duplication of efforts, but explained that the Debtor, with its responsibility to investigate whether

claims should be made to maximize recovery for the benefit of creditors, had both the right and

the obligation to conduct its own inquiries. (Copy of correspondence annexed as Exhibit E)

28. Debtor’s special counsel spoke with Barclays’ counsel again on May 13,

2009, but no satisfactory progress was made toward resolving this issue. Although Barclays

professed a general desire to provide some of the requested discovery and some “aggregate”

information in a voluntary manner, it refused to commit to any deadlines for doing so, and over a

month after specific categories of documents were requested, said it cannot be specific as to what

10

it will produce. On May 15, Barclays finally said it would produce to the Debtor copies of the

documents Barclays has already produced to the Creditors’ Committee, which is only one of the

categories Debtor requested, but also with the proviso that a confidentiality agreement must first

be reached.1

29. Thus, over three months have passed since the Debtor first requested

information from Barclays about these matters and Barclays has produced nothing to date.

Accordingly, the Debtor files this motion as this is the most efficient means for moving this

discovery ahead.

ARGUMENT

A. The Applicable Legal Standards

30. Bankruptcy Rule 2004(a) provides that “[o]n motion of any party in

interest, the court may order the examination of any entity.” FED. R. BANKR. P. 2004(a). Under

this rule, the “attendance of an entity for examination and the production of documentary

evidence may be compelled in the manner provided in Rule 9016 for the attendance of witnesses

at a hearing or trial.” FED. R. BANKR. P. 2004(c). In turn, Bankruptcy Rule 9016 makes Rule 45

of the Federal Rules of Civil Procedure (governing subpoenas) applicable in cases under the

Bankruptcy Code. FED. R. BANKR. P. 9016.

31. A debtor is a “party in interest” entitled to seek discovery under

Bankruptcy Rule 2004. See, e.g., In re Pub. Serv. Co. of New Hampshire, 91 B.R. 198, 199

(Bankr. D. N.H. 1988) (granting debtor's motion for discovery under Bankruptcy Rule 2004); In

re Sun Med. Mgmt., Inc., 104 B.R. 522, 524-25 (Bankr. M.D. Ga. 1989) (same); see also 9

1 Debtors’ counsel had asked at the May 7 meeting for a confidentiality proposal, and offered to work from

Barclays form of agreement, to avoid having that be a reason for further delay. To date, Barclays has not sent a draft, although it already has a confidentiality agreement finalized with the Creditors Committee.

11

Collier on Bankruptcy ¶ 2004.02[6] (Alan N. Resnick & Henry J. Sommer eds., 15th ed. rev.

2006) (“Parties in interest in a bankruptcy case generally include . . . the debtor . . . .”). The

debtor is entitled to seek such discovery even before the start of an adversary proceeding or

contested matter. E.g., 9 Collier on Bankruptcy ¶ 2004.01[1] (Alan N. Resnick & Henry J.

Sommer eds., 15th ed. rev. 2006) (“No contested matter or adversary proceeding need be

instituted as a prerequisite” to discovery under Bankruptcy Rule 2004). Indeed, Bankruptcy

Rule 2004 is specifically designed for discovery in advance of contested matters and adversary

proceedings. See, e.g., In re Bakalis, 199 B.R. 443, 448 (Bankr. E.D.N.Y. 1996).

32. An examination under Bankruptcy Rule 2004 may relate “to the acts,

conduct or property or to the liabilities and financial condition of the debtor, or to any matter

which may affect the administration of the debtor's estate, or to the debtor's right to a discharge.”

FED. R. BANKR. P. 2004(b). And while some courts require a showing of good cause if the target

of the requested discovery objects, see, e.g., In re Metiom, Inc., 318 B.R. 263, 268 (S.D.N.Y.

2004); In re Hammond, 140 B.R. 197, 201 (S.D. Ohio 1992), the express language of

Bankruptcy Rule 2004 does not impose a “good cause” standard or other burden on the movant.

33. In the end, the decision whether to authorize the requested discovery is

within the sound discretion of this Court. See, e.g., In re Hammond, 140 B.R. at 200.

B. The Debtor Is Entitled to Discovery of the Requested Information

34. The Debtor is, of course, working to preserve and maximize the value of

its estate for the benefit of all stakeholders. To that end, the identification of any assets that are

potentially property of the estate and the evaluation and, if appropriate, prosecution of potential

claims relating to such assets are important to ensuring that all available sources of significant

value are identified and pursued. The Debtor’s ability to investigate the circumstances

surrounding the Sale Transaction and repurchase agreements is therefore critical to determining

12

whether it has any potential claims, causes of action, or remedies with respect to these

extraordinary transactions.

35. Prompt discovery of information relating to the Sale Transaction and

related dealings (the “Requested Information”) is important to permit the Debtor and its advisors

fully to understand the complex and expedited Sale Transaction, so they can try to identify and

possibly pursue property of the estate or raise potentially valuable claims and causes of action for

the benefit of the estate and its stakeholders. Discovery of the Requested Information would

allow the Debtor to (a) evaluate its rights and obligations with respect to Barclays and the Sale

Transaction and repurchase agreements; (b) investigate the facts, circumstances and events that

led to these transactions; (c) identify property potentially in the possession of non-debtor parties

that may constitute property of the estate; and (d) determine whether the Debtor has any legal or

other claims arising under these transactions.

36. As noted in the enclosed proposed order, discovery of the Requested

Information should include both document production and deposition testimony. The Debtor’s

document requests to Barclays are attached hereto as Exhibit F and are incorporated herein by

reference (the “Discovery Requests”). The Debtor expects that it will also need to conduct

interviews or depositions of certain Barclays employees (many of whom are former Lehman

employees).

37. To allow for this discovery to proceed efficiently, the Debtor has narrowly

tailored its requests to focus on the apparent discrepancies noted above. Document Requests 1-7

and 20 (see Exhibit F at 1-2, 4) are designed to elicit general background information concerning

the Sale Transaction, the parties’ negotiations, disclosures made to the Court, and the difficult

financial situation in which Lehman found itself immediately before the bankruptcy filings. In

13

the current circumstances, the Debtor is at a severe disadvantage in trying to reconstruct the

discussions between LBHI and Barclays because virtually all the individuals that represented

LBHI in those discussions have now left the company and are employed (or were employed for a

time) by Barclays. And, of course, the individuals that negotiated the deal for Barclays are or

were Barclays employees as well. These general requests are necessary to provide the requisite

background information to allow the Debtor to fully understand what happened during these

critical two weeks in September 2009.

38. Document Requests 8-11 (see Exhibit F at 2) relate to the employee bonus

accrual issue. These requests are designed to elicit information about the parties’ expectations as

to the amounts owed by LBHI in employee bonuses, their understanding as to the purported

value that Barclays’ assumption of this liability added to the deal, the amounts Barclays has now

actually paid in employee bonuses, and any separate bonus agreements Barclays may have made

with individuals.

39. Similarly, Document Requests 13-15 (see Exhibit F at 2-3) relate to

apparent discrepancies associated with the cure amount accruals that formed an integral part of

the deal and the amounts Barclays ultimately paid in contract cures. These requests are

straightforward and relate directly to the parties’ pre-contractual expectations, how the accrual

amounts were calculated and agreed upon, and Barclays’ payment of cure amounts after the

closing.

40. Document Requests 16-19 (see Exhibit F at 3) relate to the so-called

repurchase transactions entered into by Barclays, Lehman entities, and the Federal Reserve and

addressed in the Clarifying Letter and related documents. These requests seek information about

14

the assets transferred to Barclays under these and related transactions and whether the Debtor, in

fact, received fair value under these complex transactions.

41. Request 20 is proposed in the interest of efficiency. It requests documents

Barclays may have produced to the Creditors’ Committee about these issues. Hence, it is

designed to reduce Barclays’ burden in responding to possibly duplicative requests.

42. In the end, the Requested Information is well within the scope of

Bankruptcy Rule 2004. It clearly relates to “property or to the liabilities and financial condition

of the debtor, [and] . . . matter[s] which may affect the administration of the debtor’s estate.”

FED. R. BANKR. P. 2004(b). The Debtor’s examination of its rights and obligations under the

Purchase Agreement and related repurchase agreements, and the identification of estate property

and potential claims arising under these expedited and unusual deals clearly fall within the scope

of this definition. In addition, without question, Barclays is subject to Rule 2004 discovery, see

FED. R. BANKR. P. 2004(a) (allowing examination of “any entity”), particularly since it was

intimately involved in these transactions and was the ultimate beneficiary of these asset transfers.

43. Further, given the size and strategic importance to the estate of the Sale

Transaction and related repurchase and other agreements, any valid claim or defense arising from

these complex deals could be substantial. At the time of the Sale Transaction, Lehman was the

fourth largest investment bank in the United States. These extraordinary transactions involved

the sale of substantially all of Lehman’s U.S. and Canadian investment banking and capital

markets business. This discovery is critical to the Debtor’s efforts to maximize values for all its

stakeholders as the discrepancies noted above appear to involve very large dollar amounts. The

fact that a deal of this size was done in less than a week, under most extraordinary

15

circumstances, only serves to underscore the need to examine the transaction closely and to

address apparent discrepancies that might provide a recovery for the estate.

44. Finally, the information the Debtor seeks is not readily available without

the requested discovery. Most of the former Lehman employees with relevant knowledge

(including those who negotiated the deal on behalf of LBHI) became employees of Barclays.

Many of these Barclays employees are the only individuals with knowledge of critical facts

relating to the Sale Transaction and the repurchase and related agreements. Similarly, many

critical documents concerning the liabilities incurred by Barclays and the benefits conferred on

LBHI are solely within Barclays’ control. And, as noted, Barclays will not voluntarily provide

this information to the Debtor.

45. For these reasons, the Debtor is entitled to take the discovery it seeks in

this motion.

NOTICE

46. No trustee has been appointed in these chapter 11 cases. The Debtor has

served notice of this motion in accordance with the procedures set forth in the order entered on

February 13, 2009 governing case management and administrative procedures for these cases

[Docket No. 2837] on (i) the U.S. Trustee; (ii) counsel for the Creditor’s Committee; (iii) the

Securities and Exchange Commission; (iv) the Internal Revenue Service; (v) the United States

Attorney for the Southern District of New York; (vi) counsel for Barclays; and (vii) all parties

who have requested notice in these chapter 11 cases. The Debtor submits that no other or further

notice need be provided.

WHEREFORE, the Debtor respectfully requests that the Court (a) enter an order

substantially in the form attached hereto as Exhibit G, granting the relief requested herein; and

(b) grant such other and further relief to the Debtor as the Court may deem proper.

16

Dated: May 18, 2009 New York, New York

Respectfully submitted,

/s/ Robert W. Gaffey Robert W. Gaffey William J. Hine Jayant W. Tambe Benjamin Rosenblum JONES DAY 222 East 41st Street New York, New York 10017 Telephone: (212) 326-3939 Facsimile: (212) 755-7306 ATTORNEYS FOR DEBTOR AND DEBTOR IN POSSESSION

EXHIBIT F

The Estate makes the following requests for the production of documents:

1. All documents concerning any discussions, meetings or communications between Barclays, any other potential acquirers, the Federal Reserve, SEC, Treasury Department or any other government entity concerning the financial difficulties or problems at Lehman during the three month period prior to LBHI’s bankruptcy filing on September 15, 2008 through September 30, 2008.

2. All documents concerning any discussions or negotiations between Barclays and Lehman (or their respective agents and counsel) regarding any proposed purchase, sale, merger, transfer or similar transaction in which some or all of the assets, liabilities or business of Lehman or any Lehman entity was to be sold, acquired, transferred or assumed to or by Barclays or any Barclays entity, including but not limited to any negotiations or discussions during the month preceding LBHI’s bankruptcy filing on September 15, 2008 and through September 30, 2008.

3. All documents concerning any due diligence performed by or on behalf of Barclays, any Barclays entity, or any of their agents in connection with the September 2008 Lehman-Barclays Transaction or any proposed or contemplated transaction described in Request No. 2 above, including any investigation, document review, employee interviews, research, discussion or analysis conducted by Barclays with respect to the assets, liabilities, valuation, projections, budgets or expected viability of Lehman or any Lehman entity.

4. All documents concerning the negotiation, drafting, execution and implementation of the Lehman-Barclays Transaction documents, including (i) the Asset Purchase Agreement, dated September 16, 2009, including any amendments, schedules or annexes thereto and the one-page schedule, dated September 16, 2008, initialed by Steven Berkenfeld, and referenced in section 9.1(c) (collectively, the “Original APA”); (ii) the First Amendment to the Original APA, dated September 19, 2008 (“First Amendment”); (iii) the clarification letter, dated as of September 20, 2008 (“Clarification Letter”); (iv) the Transition Services Agreement, dated September 22, 2009 (“TSA”); and (v) any related contracts, agreements or arrangements.

5. All documents concerning the schedule dated September 16, 2008 referenced in section 9.1(c) of the Original APA, including but not limited to all documents concerning the data upon which that schedule was based, the manner in which it was prepared, all drafts of the schedule, all correspondence concerning the schedule, and all signed versions of the schedule.

6. All documents concerning Assumed Liabilities (as defined in the Original APA), including documents reflecting the specific liabilities assumed by Barclays or extinguished in the Lehman-Barclays Transaction, the value attributed to such Assumed Liabilities as of the date of the Original APA, the value attributed to such Assumed Liabilities as of the date of the Clarification Letter and the value Barclays assigned to the Assumed Liabilities on or after the date the Lehman-Barclays Transaction closed.

7. All documents concerning any press release or other public statements issued by Barclays, investor conference call held by Barclays (including that held on September 17, 2008), or other public filing or communication to investors issued by Barclays concerning: (i) the

2

Lehman-Barclays Transaction, (ii) the amounts, types and value of assets and liabilities to be acquired or assumed by Barclays as a result of the Lehman-Barclays Transaction, or (iii) the profits or other benefits Barclays received or expects to receive as a result of the Lehman-Barclays Transaction.

8. All documents concerning Barclays’ payment, deferral, alteration, renegotiation, revision, or non-payment of bonuses (cash or otherwise), severance or other forms of compensation to former LBI or Lehman executives or other employees who obtained or sought to obtain employment at Barclays following the Lehman-Barclays Transaction, including (i) any agreements, contracts or other arrangements (actual or proposed) between Barclays and any former Lehman employees, and (ii) documents sufficient to show the recipients and amounts of bonuses or other forms of compensation actually paid or committed to be paid to each former LBI or Lehman executive or employee that transferred to or was employed by Barclays after the Lehman-Barclays transaction. This request includes, but is not limited to, bonuses and severance paid under section 9 of the Original APA.

9. All documents concerning any negotiations, promises, assurances, enticements, commitments or discussions at any time prior to September 22, 2008 concerning bonuses, severance or other forms of compensation, or other things of value to be paid by Barclays to former LBI or Lehman executives or employees who obtained or sought to obtain employment at Barclays following the Lehman-Barclays Transaction or the bankruptcy filing of any Lehman entity.

10. All documents reflecting communications during the period from September 1, 2008 to September 30, 2008 concerning (a) the Lehman-Barclays transaction or (b) employment by Barclays after the Lehman-Barclays transaction between Barclays and (1) Steven Berkenfeld, (2) Gerald Donini, (3) Eric Felder, (4) Joseph Gatto, (5) Steven Hash, (6) Ian Lowitt, (7) Herbert McDade, (8) Paul Parker, (9) Ros Stephenson, (10) Jeff Weiss, (11) Larry Wieseneck, (12) Michael Gelband, (13) Thomas Humphrey, (14) Hyung Lee, (15) Hugh E. (“Skip”) McGee, III, or (16) Ajay Nagpal.

11. All documents concerning any employment agreements, compensation agreements, bonus agreements, severance agreements, consulting agreements or other agreements concerning compensation between Barclays and (1) Steven Berkenfeld, (2) Gerald Donini, (3) Eric Felder, (4) Joseph Gatto, (5) Steven Hash, (6) Ian Lowitt, (7) Herbert McDade, (8) Paul Parker, (9) Ros Stephenson, (10) Jeff Weiss, (11) Larry Wieseneck, (12) Michael Gelband, (13) Thomas Humphrey, (14) Hyung Lee, (15) Hugh E. (“Skip”) McGee, III, or (16) Ajay Nagpal.

12. All documents concerning Barclays’ accounting, valuation, expensing or accruing for any bonuses (cash or otherwise), severance or other forms of compensation that Barclays paid or is obligated or expects to pay to former LBI or Lehman executives or employees who obtained or sought to obtain employment at Barclays following the Lehman-Barclays Transaction or the bankruptcy filing of any Lehman entity.

13. All documents concerning Barclays’ payment, deferral, alteration, renegotiation, revision, or non-payment of cure amounts owed or claimed to be owed to third party vendors or other non-Lehman entities under any contracts originally entered into by Lehman entities and transferred to

3

or assumed by Barclays pursuant to the Original APA, the First Amendment, the Clarification Letter or the TSA (“Contract Cure Amounts”). This request includes any agreements, contracts or other arrangements (actual or proposed) between Barclays and any third party vendors or non-Lehman entities concerning Contract Cure Amounts.

14. All documents concerning Barclays’ decision to categorize, designate or otherwise treat any contracts. commitments or agreements as “Closing Date Contracts” or “Designated Contracts” or “Rejected Contracts” (as defined under the Original APA or as referred to in the orders of the Bankruptcy Court). This request includes documents sufficient to identify the contracts and the third-party vendors and amounts in issue under them.

15. All documents concerning Barclays’ accounting, valuing, expensing and accruing for Contract Cure Amounts (actual or proposed), including documents sufficient to show the Contract Cure Amounts Barclays actually paid or is obligated or expects to pay to all third party vendors or other non-Lehman entities.

16. All documents concerning “Purchased Assets” (as defined in the Original APA and Clarification Letter), including schedules reflecting the specific assets purchased or transferred to Barclays, the value attributed to such Purchased Assets as of the date of the Original APA, and the value attributed to such Purchased Assets as of the date of the Clarification Letter or thereafter.

17. All documents concerning the negotiating, booking, executing, funding, pledging of collateral, or repurchasing of collateral in connection with any transaction between LBI and Barclays transacted on or after September 15, 2008 pursuant to any repurchase agreement (“Repo Transactions”). This request includes any agreements, correspondence, confirmations setting forth the terms of the Repo Transactions, blotters, spreadsheets, valuations, documents relating to settlement issues, or other related documents.

18. All documents concerning the negotiation, drafting, execution and implementation of the Settlement Agreement dated December 5, 2008 (the “Settlement Agreement”).

19. All documents concerning any Lehman securities transferred to Barclays in connection with the Repo Transactions, the Lehman-Barclays Transaction, or the Settlement Agreement (“Transferred Securities”) or any Lehman securities not transferred to Barclays despite the contemplation of their transfer pursuant to either the Repo Transactions, the Lehman-Barclays Transaction, or the Settlement Agreement (“Other Securities”).

This request includes (i) any documents reflecting negotiations resulting in a Lehman security becoming part of the group of Transferred Securities or Other Securities; (ii) mark-to-market valuations on a security-by-security basis for the Transferred Securities or Other Securities for any relevant period of the time between September 15, 2008 and December 2008, (iii) bank account statements reflecting the Transferred Securities or Other Securities and any flow of funds related to either, (iv) any instructions or correspondence regarding the delivery of the Transferred Securities or Other Securities, including any documents concerning delivery failures with respect to any of the Transferred Securities or Other Securities; and (v) any

4

documents concerning the delivery of cash in lieu of any of the Transferred Securities or Other Securities.

20. All documents provided to the Official Committee of Unsecured Creditors (the “Committee”) appointed in In re Lehman Brothers Holding Inc., et al., Case No. 08-13555 (JMP), pursuant to the Committee’s letter requests dated December 26, 2008 and February 10, 2009, and any additional documents provided to the Committee in connection with any subsequent requests.


x : : : : : : : x


ORDER, PURSUANT TO FED. R. BANKR. P. 2004, AUTHORIZING DISCOVERY FROM BARCLAYS CAPITAL, INC.

This matter coming before the Court on the Motion of Debtor and Debtor In

Possession for an Order, Pursuant to Fed. R. Bankr. P. 2004, Authorizing Discovery From

Barclays Capital, Inc. (the “Motion”),1 filed by Lehman Brothers Holdings Inc., as debtor and

debtor in possession in the above-captioned case (the “Debtor”); the Court having reviewed the

Motion and having considered the statements of counsel before the Court (the “Hearing”); and

the Court having found that: (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C.

§§ 157 and 1334; (b) this is a core proceeding pursuant to 28 U.S.C. § 157(b); and (c) notice of

the Motion and the Hearing was sufficient under the circumstances; and the Court having

determined that the legal and factual bases set forth in the Motion and at the Hearing establish

just cause for the relief granted herein;

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED.

2. The Debtor may, in its discretion, and is authorized to, conduct written

discovery and depositions against Barclays concerning the Requested Information.

1 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

3. Barclays is hereby ordered to produce documents and otherwise respond to

the written discovery requests in Exhibit F to the Motion within 20 days of the date hereof.

4. Barclays is hereby further ordered to produce witnesses to appear for oral

depositions under oath on such date and time and at such location as may be designated in writing by

the Debtor on not less than 14 days notice.

5. The Debtor may issue discovery requests and subpoenas as may be necessary

to accomplish the discovery authorized by this Order.

6. Nothing contained herein shall prejudice the Debtor’s rights under Bankruptcy

Rule 2004 and other applicable law to seek further document production and written and oral

examinations in connection with these chapter 11 cases.

7. The Court shall retain jurisdiction to hear and determine all matters arising

from or related to the implementation of this Order.

Dated: New York, New York ____________, 2009

UNITED STATES BANKRUPTCY JUDGE

A. 167


x : : : : : : : x


ORDER, PURSUANT TO FED. R. BANKR. P. 2004, AUTHORIZING DISCOVERY FROM BARCLAYS CAPITAL, INC.

This matter coming before the Court on the Motion of Debtor and Debtor In

Possession for an Order, Pursuant to Fed. R. Bankr. P. 2004, Authorizing Discovery From

Barclays Capital, Inc. (the “Motion”),1 filed by Lehman Brothers Holdings Inc., as debtor and

debtor in possession in the above-captioned case (the “Debtor”); the Court having reviewed the

Motion and having considered the statements of counsel before the Court (the “Hearing”); and

the Court having found that: (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C.

§§ 157 and 1334; (b) this is a core proceeding pursuant to 28 U.S.C. § 157(b); and (c) notice of

the Motion and the Hearing was sufficient under the circumstances; and the Court having

determined that the legal and factual bases set forth in the Motion and at the Hearing establish

just cause for the relief granted herein;


1. The Motion is GRANTED.

2. The relief requested in the Committee’s joinder to the Motion is granted. The

Committee shall be entitled to receive copies of all documents produced to the Debtor pursuant to

1 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

this Order and representatives of the Committee shall be entitled to appear and propound questions

at any deposition noticed in accordance with this Order.

3. The Debtor may, in its discretion, and is authorized to, conduct written

discovery and depositions against Barclays concerning the Requested Information.

4. Barclays is hereby ordered to produce documents and otherwise respond to

the written discovery requests in Exhibit F to the Motion within 20 days of the date hereof.

5. Barclays is hereby further ordered to produce witnesses to appear for oral

depositions under oath on such date and time and at such location as may be designated in writing by

the Debtor on not less than 14 days notice.

6. The Debtor may issue discovery requests and subpoenas as may be necessary

to accomplish the discovery authorized by this Order.

7. Nothing contained herein shall prejudice the Debtor’s rights under Bankruptcy

Rule 2004 and other applicable law to seek further document production and written and oral

examinations in connection with these chapter 11 cases.

8. The Debtor shall meet and confer with (a) Anton R. Valukas, U.S. Trustee-

appointed Examiner in Debtor’s chapter 11 case (the “Examiner”), (b) the Official Committee of

Unsecured Creditors (the "Committee") of Debtor, and (c) James W. Giddens, Trustee for the

liquidation of Lehman Brothers Inc. under the Securities Investor Protection Act of 1970 (the “SIPA

Trustee”), to develop a protocol for the coordination of the discovery they seek from Barclays in

accordance with this Order and in accordance with the Court’s directions on the record at the hearing

held June 24, 2009. The Debtor, The Examiner, the Committee and the SIPA Trustee shall also

meet and confer with Barclays about the discovery ordered herein and shall report to the Court no

later than the date of the next omnibus hearing, scheduled for July 15, 2009 ,with respect to any

issues that arise and they are not able to resolve.

9. Existing confidentiality agreements shall be modified to, and any

confidentiality agreement between the Debtor and Barclays shall, allow for the coordinated

discovery noted above, including a provision that will allow for the sharing between Debtor, the

Examiner, the Committee, and the SIPA Trustee of information received from Barclays.



Dated: New York, New York June 25, 2009

s/ James M. Peck UNITED STATES BANKRUPTCY JUDGE

A. 168

212-267-6868 516-608-2400VERITEXT REPORTING COMPANY

1



Case Nos. 08-13555(JMP); 08-01420(JMP)(SIPA)

- - - - - - - - - - - - - - - - - - - - -x

In the Matter of:

LEHMAN BROTHERS HOLDINGS, INC., et al.

Debtors.

- - - - - - - - - - - - - - - - - - - - -x

In the Matter of:

LEHMAN BROTHERS INC.

Debtor.

- - - - - - - - - - - - - - - - - - - - -x

United States Bankruptcy Court

One Bowling Green

New York, New York

June 24, 2009

10:15 AM

B E F O R E:

HON. JAMES M. PECK

U.S. BANKRUPTCY JUDGE


2

1

2 HEARING re Debtors' Motion for Authorization to (i) Assume

3 Unexpired Lease of Nonresidential Real Property; and (ii)

4 Assume and Assign Unexpired Leases of Real Property

5

6 HEARING re Debtors' Motion to Restructure Certain Loans with

7 Broadway Partners Fund Manager, LLC, et. al.

8

9 HEARING re Motion of Unclaimed Property Recovery Service, Inc.

10 for Compelling Payment of Unclaimed Funds by the New York State

11 Comptroller

12

13 HEARING re Motion Authorizing Discovery from Barclays Capital,

14 Inc.

15

16 HEARING re Motion of Kalaimoku-Kuhio Development Corp for (i)an

17 Order Compelling Payment of Post-Petition Rent and Charges and

18 (ii)Granting Relief from the Automatic Stay

19

20 HEARING re Debtors Motion for Establishment of the Deadline for

21 Filing Proofs of Claim, Approval of the Form and Manner of

22 Notice Thereof, and Approval of the Proof of Claim Form

23

24

25


3

1

2 ADVERSARY PROCEEDING:

3

4 HEARING re Deutsche Bank AG v. Lehman Brothers Holdings Inc.

5 Motion for Summary Judgment

6

7 SECURITIES INVESTOR PROTECTION CORPORATION PROCEEDINGS:

8

9 HEARING re Trustee's Application for an Order Pursuant to

10 Section 365(d)(1) of the Bankruptcy Code Further Extending the

11 Time Within Which the Trustee may Assume or Reject Executory

12 Contracts and Certain Unexpired Leases

13

14

15

16

17

18

19

20

21

22

23

24

25 Transcribed by: Lisa Bar-Leib


38

1 requests made by the creditors' committee.

2 THE COURT: Okay. And I have, I guess, a more

3 fundamental question which is where can this lead. Let's just

4 assume for the sake of discussion that you conduct court-

5 authorized 2004 discovery obtained information and discover a

6 smoking gun or some other piece of information that gives you

7 reason to think that Barclays ended up with too good a deal

8 during that week we all remember. Those of us who participated

9 remember it well. But the order approving that transaction was

10 affirmed at the district court level by Judge Cote and was

11 ultimately final by virtue of the disposition of the Second

12 Circuit of the appeal. The appeal is now dismissed. And so, I

13 have a final sale order and so do you. So let's just assume

14 you find something that gives you reason to question whether or

15 not Barclays got too good a deal. Then what?

16 MR. GAFFEY: I think the answer to that, Your Honor,

17 is with respect to the sale order itself, I think I still have

18 an opportunity although it may not be the mechanism that's

19 required here to come back under Rule 60, Rule 9024 on grounds

20 of either mistake -- for example, if the smoking gun Your Honor

21 refers to shows, as some of our documents appear to indicate,

22 that the two billion dollars was actually the firm wide accrual

23 for comp, not the North American operations. Let's take that

24 as purely a hypothetical. I think I have an opportunity to

25 come back under Rule 60 and revisit the sale order at that


39

1 point on the grounds of mistake.

2 Should a smoking gun indicate grounds of

3 misrepresentation or fraud, I also have that opportunity. And

4 Rule 60 also allows the Court to give relief from the order for

5 any other reason that justifies relief.

6 Now, with respect to the first two components there,

7 the debtor has a year to do it. That doesn't apply to the

8 third. But it does apply to the first two which goes to the

9 need for expedition and efficiency on the discovery we seek.

10 But I think I can come back, I could come back conceivably and

11 ask the Court to revisit the sale order under Rule 60 as

12 Barclays, by the way, has done twice.

13 I think we're not restricted to Rule 60 relief,

14 however. There could be claims. There could be claims to be

15 asserted against Barclays. For example, and this is just by

16 way of example, and, again, Your Honor, I emphasize subject to

17 what discovery we get and what facts we see. There could be

18 the imposition of a constructive trust over assets that were

19 given to Barclays that were meant for a particular purpose and

20 not used for such. There could be a claim for conversion on

21 the same grounds. If a tangible fund was given to Barclays in

22 the transaction, again, for an annotated earmarked purpose and

23 it's not used for that purpose, I think, under New York State

24 law, a conversion claim could lie.

25 There could be breach of fiduciary duty claims. One


40

1 of the things we've raised in our papers is that some of the

2 discovery we seek goes to compensation offers made to and

3 compensation subsequently paid to former Lehman executives who

4 were near or in the negotiations to determine whether or not

5 they abided by their duties to the corporation or whether they

6 gave away points they shouldn't have given away concerned more

7 about their own financial wherewithal.

8 Again, Your Honor, I emphasize we are just looking at

9 what the possibilities could be and what the early indications

10 are. But I think if I have a breach of fiduciary duty claim, I

11 could look to Barclays for an aiding and abetting claim. I

12 think -- in other words, Your Honor, I don't think the sale

13 order, with respect to independent claims that could be

14 assertive in a complaint is the be all and the end all of that.

15 I think there may a breach of contract claim under the asset

16 purchase agreement.

17 Now, Barclays have said in their opposition that they

18 have no obligation to pay two billion dollars. That's just not

19 what the contract says. The contract is mandatory. The

20 contract says they shall pay it.

21 So it's a fair question, Your Honor, most absolutely,

22 and it's one that I gave a lot of thought to as we proceeded

23 down the Rule 2004 path. Again, at the risk of repetitive, I

24 don't want what I'm saying today to be an announcement that we

25 have such claims. I want it to be an announcement that we need


41

1 to take discovery to make a responsible determination as to

2 whether (a) the estate has them and (b) should proceed with

3 those claims.

4 THE COURT: All right. Thank you.

5 MR. GAFFEY: Thank you, Your Honor.

6 THE COURT: I see people coming from two sides. Are

7 you -- do you represent different parties?

8 MR. HUME: Yes, Your Honor.

9 MR. DUNN: Yes.

10 THE COURT: And who do you represent?

11 MR. DUNN: Westernbank.

12 THE COURT: And you represent Barclays?

13 MR. HUME: Correct, Your Honor.

14 THE COURT: I think Barclays might be the key person

15 to hear from right now.

16 MR. HUME: Thank you, Your Honor. Hamish Hume from

17 Boies, Schiller & Flexner. I'm here with our managing partner,

18 Jonathan Schiller. I'll be handling the argument today, Your

19 Honor.

20 Your Honor, in paragraph 1 of their reply, LBHI

21 disclaims that they are undertaking a wholesale attack on the

22 sale order or trying to retrade the deal. I think in the

23 answer you were just given, Your Honor, respectfully, you see

24 that that isn't, in fact, what this discovery is intended to

25 do. This Court found that the sale was undertaken in the best


47

1 didn't get back. They got collateral in the form of securities

2 that were plummeting in value. And then it didn't even get all

3 those. And as Your Honor knows, had to come to this Court for

4 a settlement in which it didn't receive the full amount that it

5 was supposed to. And the Federal Reserve, through Shari

6 Leventhal's affidavit, told the Court that she had evaluated

7 the whole thing and thought it was a fair settlement.

8 None of this is news to the Court. None of this is

9 confusing or should be a source of confusion or allegations

10 that there is --

11 THE COURT: It's not news but it is confusing. And I

12 think that one of the problems -- I'm just giving you a very

13 candid appraisal. In talking about something that's this

14 massive from the perspective of looking back at it nine months

15 later is that I know from having sat here during that week that

16 it was an extraordinary time in the history of global finance.

17 And things were happening very, very quickly. Very skillful

18 lawyers and businesspeople put together an extraordinary

19 transaction in virtually no time. And it's conceivable that

20 mistakes were made. As has been pointed out by special counsel

21 for the debtors and as you know, Barclays itself sought 60(b)

22 relief on two separate occasions having to do with contracts

23 listed on the list for assumption and the Amex Barclays

24 litigation continues, although I believe it to be close to

25 resolution.

A. 169


1



Case Nos. 08-13555, 08-01420 (SIPA)

- - - - - - - - - - - - - - - - - - - - -x

In the Matter of:

LEHMAN BROTHERS HOLDINGS INC., ET AL.,

Debtors.

- - - - - - - - - - - - - - - - - - - - -x

In the Matter of:

LEHMAN BROTHERS INC.,

Debtor.

- - - - - - - - - - - - - - - - - - - - -x

U.S. Bankruptcy Court

One Bowling Green

New York, New York

August 11, 2009

10:02 a.m.

B E F O R E:

HON. JAMES M. PECK

U.S. BANKRUPTCY JUDGE


2

1 MOTION of Bank of New York to Dismiss Complaint in Case No. 09-

2 01242

3

4 SCHEDULING Conference on Defendant's Motion for Summary

5 Judgment and Debtors' Cross-Motion for Summary Judgment

6

7 MOTION of Trustee to Dismiss Complaint in Case No. 09-01160

8

9 MOTION of Unclaimed Property Recovery Service's Motion for

10 Orders (A) Compelling Payment of Unclaimed Funds by the New

11 York State Comptroller, (B) Lifting the Automatic Stay, or,

12 Alternatively, Providing Relief From the Automatic Stay, (C)

13 Allowing Payment for Services Provided Post-Petition and (D)

14 Other Relief

15

16

17

18

19

20

21

22

23

24 Transcribed By: Esther Accardi

25


107

1 better recollection or have checked out what the docket

2 reflects, I'll be happy to hear what you have to say, but my

3 recollection is that I never approved it.

4 MS. GOLDSTEIN: Your Honor, I wasn't here so I can't

5 comment. I do know that in the order that approves the sale

6 transaction it does refer to and it defines the purchase

7 agreement as including the asset purchase agreement. There was

8 a first amendment and then the clarification letter. My

9 understanding from some of my colleagues is that some of the

10 terms of the clarification letter were discussed in court over

11 that Friday, that marathon --

12 THE COURT: We've had a lot of hearings that have

13 touched on the sale to Barclays, both contemporaneously and

14 after the fact, and the clarification letter obviously will

15 speak for itself and it's not in evidence other than through

16 judicial notice at this point, but it is my recollection that

17 it was entered into after the closing, during the business days

18 that followed, and that it was never the subject of a separate

19 motion for court approval. To the extent that it was somehow

20 obliquely referenced in transaction documents doesn't

21 necessarily mean that it's the subject of a formal court order.

22 And that's one of the problems that I'm having with your legal

23 position, which is, as argued by the trustee, there really is

24 no freestanding motion to assume the lease at 555 California

25 Street, nor is there an omnibus motion to assume leases. It's

A. 170


x : : : : : : : x



x : : : : : : : x


SCHEDULING ORDER CONCERNING CERTAIN MOTIONS FILED BY LBHI, SIPA TRUSTEE AND CREDITORS COMMITTEE

WHEREAS, the following motions have been filed with the Court seeking, inter

alia, modifications of (i) the Court’s Order Under 11 U.S.C. §§ 105(a), 363, and 365 and Federal

Rules of Bankruptcy Procedure 2002, 6004 and 6006 Authorizing and Approving (A) the Sale of

Purchased Assets Free and Clear of Liens and Other Interests and (B) Assumption and

Assignment of Executory Contracts and Unexpired Leases, dated September 20, 2008, or (ii) the

Court’s Order Approving, and Incorporating by Reference for Purposes of this Proceeding, an

Order Authorizing the Sale of Purchased Assets and Other Relief in the Lehman Brothers

Holdings Inc. Chapter 11 Proceeding; or both such Orders (individually or collectively, the “Sale

Order”):

(1) Debtor’s Motion for An Order, Pursuant to Fed. R. Civ. P. 60 and Fed. R. Bankr. 9024, Modifying the September 20, 2008 Sale Order and Granting Other Relief, dated September 15, 2009 (“LBHI’s Motion”);

(2) The Trustee’s Motion for Relief Pursuant to the Sale Order or, Alternatively, for Certain Limited Relief Under Rule 60(b), dated September 15, 2009 (“Trustee’s Motion”); and

(3) Motion of Official Committee of Unsecured Creditors of Lehman Brothers Holdings Inc., et al., Pursuant to 11 U.S.C. §§ 105(a), Fed. R. Civ. P. 60(b), and Fed. R. Bankr. P. 9024, For Relief From Order Under 11 U.S.C. §§ 105(a), 363 and 365 and Federal Rule of Bankruptcy Procedure 2002, 6004 and 6006 Authorizing and Approving (A) Sale of Purchased Assets Free and Clear of Liens and Other Interests and (B) Assumption and Assignment of Executory Contracts and Unexpired Leases, dated September 20, 2008 (and Related SIPA Sale Order) and Joinder In Debtor’s and SIPA Trustee’s Motions for an Order Under Rule 60(b) to Modify Sale Order (“Committee’s Motion”);

(4) Motion of Lehman Brothers Holdings Inc., Pursuant to Fed. R. Civ. P. 60 and Fed. R. Bankr. P. 9024, Modifying The SIPA Sale Order and Joinder in Official Committee of Unsecured Creditors' Motion for Relief From SIPA Sale Order (“LBHI’s Joinder”); and

(5) The Trustee’s Motion to Join in Debtors’ Motion for an Order Pursuant to Fed. R. Civ. P. 60 and Fed. R. Bankr. 9024, Modifying the September 20, 2009 Sale Order and Granting Other Relief (“LBI’s Joinder,” and collectively with the above-referenced motions, the “Rule 60 Motions”).

WHEREAS, Barclays Capital Inc. (“Barclays”) has issued discovery requests and

third party subpoenas and plans to take certain depositions in connection with its intention to file

an opposition to the Rule 60 Motions;

WHEREAS, Lehman Brothers Holdings Inc. (“LBHI”), James W. Giddens (the

“Trustee”), as Trustee for the SIPA liquidation of Lehman Brothers Inc., and the Official

Committee of Unsecured Creditors of Lehman Brothers Holdings Inc., et al. (“Creditors

Committee”) require additional discovery in connection with their Rule 60 Motions; and

WHEREAS, counsel for LBHI, the Trustee, the Creditors Committee, and

Barclays have agreed upon the following schedule for the conduct of discovery and the

preparation and filing of their respective submissions with respect to the Rule 60 Motions.


1. To the extent LBHI, the Trustee or the Creditors Committee intend to file

adversary complaints in connection with subjects related to the Rule 60 Motions, all such

adversary complaints shall be served and filed on or before November 16, 2009. To the extent

the complaints contain claims that are already made as part of the Rule 60 Motions, those claims

shall be resolved pursuant to the schedule set forth in this order for resolving the Rule 60

Motions. Within ten days of such filing, the parties shall meet and confer to agree upon which

claims in such complaints shall be resolved through the resolution of the Rule 60 Motions and

which claims shall be stayed pending such resolution.

2. Barclays shall be entitled to conduct discovery prior to filing its response to

the Rule 60 Motions, including interrogatories, requests for admission and third party subpoenas,

in accordance with the normal rules governing discovery under a contested matter, except as

otherwise provided in this Order. LBHI, the Trustee and the Creditors Committee shall respond

to the document requests served by Barclays on September 22 and 23, 2009 in accordance with

Paragraph 4 below and shall produce responsive documents on a rolling basis with such

production to be completed no later than November 16, 2009. LBHI, the Trustee and the

Creditors Committee shall respond to the supplemental document requests served by Barclays on

October 9, 2009 in accordance with Paragraph 4 below and shall produce responsive documents,

if any, on a rolling basis with such production to be completed no later than December 8, 2009.

3. On or before November 16, 2009, Barclays shall make a supplemental

production pursuant to Movants’ Rule 2004 requests consisting of:

(a) GFS Reports for each day between September 12, 2008 and September 30, 2008 for which a report has not already been produced; and

(b) Additional documentation to explain and support the acquisition balance sheet reported by Barclays in February 2009.

No additional discovery pursuant to Rule 2004 shall be required except as provided above and as

previously agreed with regard to the documents of Gerard Reilly and the resumed deposition of

Martin Kelly. LBHI, the Trustee and the Creditors Committee may serve Barclays with requests

for any additional documents they seek or other discovery requests, including interrogatories,

requests for admission, and third party subpoenas in accordance with the normal rules governing

discovery under a contested matter, except as otherwise provided in this Order.

4. In response to any document request served in this contested matter, the

responding party will serve written responses and objections within twenty days of service of the

document request (or, with respect to Barclays discovery requests served in September 2009, the

written responses and objections shall be served by October 23, 2009), which responses and

objections will make clear the scope of the responding party’s anticipated document production

in response to the request. In response to such responses and objections, the requesting party

may conduct a meet and confer and pre-motion conference, and may file a motion to compel

production, without prejudice to the responding party’s right to argue that decision on such

motion to compel should be deferred.

5. On or before December 15, 2009, LBHI, the Trustee and the Creditors

Committee shall serve statements (presented in separate, short and concise, numbered

paragraphs, with citations to the record) of the facts relevant to their Rule 60 Motions as to which

they contend there is no genuine issue that requires an evidentiary hearing.

6. By January 8, 2010, Barclays shall identify any witnesses it may use to

present expert testimony in support of its opposition to the Rule 60 Motions or any motion it may

file as described in paragraph 8 and shall serve upon LBHI, the Trustee and the Creditors

Committee expert reports pursuant to Fed. R. Civ. P. 26(a)(2)(B). Thereafter, Barclays shall

make its experts available for deposition.

7. Barclays shall have the right to take up to 20 depositions without seeking

leave of the Court. Absent good cause to proceed otherwise, witnesses who are employed by or

are agents of, LBHI, the Trustee or the Creditors Committee, including but not limited to

representatives of LBHI, LBI, the Creditors Committee, Weil, Gotshal & Manges LLP, Hughes,

Hubbard & Reed, LLP, Houlihan Lokey, Deloitte & Touche LLP and Lazard Ltd., shall appear

for depositions within 14 calendar days of any notice of deposition or third party subpoena

served by Barclays, or within a reasonable period of time thereafter as agreed by the parties.

These depositions shall be completed by January 22, 2010, unless Barclays chooses to conduct

any such deposition at a later date, in which case the deposition shall be completed by no later

than February 15, 2010. In the event that LBHI, the Trustee, or the Creditors Committee

attaches an affidavit or declaration to any of their reply briefs from one or more individuals who

has not yet been deposed, then Barclays shall have the right to depose such persons,

notwithstanding any of the limitations in this paragraph.

8. By January 29, 2010, Barclays shall serve two oppositions: (i) a single

consolidated opposition to the Rule 60 Motions other than the Trustee’s arguments regarding

interpretation of the Sale Order and the Purchase Agreement relating to the Undelivered Assets;

and (b) an opposition to all arguments made by the Trustee regarding interpretation of the Sale

Order and the Purchase Agreement relating to the Undelivered Assets. At the same time,

Barclays shall file a motion to enforce the Sale Order and secure delivery of any Undelivered

Assets thereunder, and the arguments in such motion shall consist of an incorporation by

reference of all arguments set forth in Barclays’ opposition brief referenced in subparagraph (b)

of this paragraph.

9. By January 29, 2010, Barclays shall serve statements (presented in separate,

short and concise numbered paragraphs, with citations to the record) responding to the

statements submitted by LBHI, the Trustee and the Creditors Committee pursuant to

Paragraph 5.

10. Without duplicating discovery previously taken, LBHI, the Trustee and the

Creditors Committee may take at any time additional discovery, including but not limited to the

deposition of any witness who submits an affidavit or declaration on Barclays’ opposition to the

Rule 60 Motions and any motion Barclays may file as described in Paragraph 8 above or

depositions under Rule 30(b)(6). Such depositions shall be completed on or before February 15,

2010, and Barclays shall make all such witnesses available for deposition before that deadline.

Without leave of Court, the number of such depositions collectively taken by LBHI, the Trustee

and the Creditors Committee shall not exceed ten. This limitation does not include expert

witnesses. Absent good cause to proceed otherwise, witnesses employed by or agents of

Barclays, including but not limited to Cleary, Gottlieb, Steen & Hamilton LLP and Sullivan &

Cromwell LLP, shall appear within 14 calendar days of any notice of deposition or third party

subpoena served by LBHI, the Trustee or the Creditors Committee, or within a reasonable time

thereafter as agreed by the parties. In the event that Barclays attaches an affidavit or declaration

to any of its motion papers from one or more individuals who have not yet been deposed, then

LBHI, the Trustee or the Creditors Committee shall have the right to depose such persons,

notwithstanding any of the limitations in this paragraph.

11. By March 1, 2010, LBHI, the Trustee and the Creditors Committee shall

identify any experts and serve any expert reports pursuant to Fed. R. Civ. P. 26(a)(2)(B).

12. By March 4, 2010, LBHI, the Trustee and the Creditors Committee shall serve

their respective (i) reply papers in further support of the Rule 60 Motions; and (ii) opposition to

any motion Barclays may file, as described in Paragraph 8.

13. By March 18, 2010, Barclays shall serve and file its reply brief in further

support of its motion to enforce the delivery of the Undelivered Assets. Barclays shall be

entitled to cite to its earlier expert report in support of its reply brief, but shall not be entitled to

rely upon any supplemental expert report in support of its reply brief without making

arrangements for a reasonable opportunity for deposition and supplemental response by the

LBHI, the Trustee and the Creditors Committee.

14. The parties shall appear before the Court at 10 a.m. on March 25, 2010 for

oral argument on the Rule 60 Motions. The Court has scheduled ten days for any potential

evidentiary hearing on the Rule 60 Motions beginning at 10 a.m. on April 26, 2010, and

continuing as needed for the week of April 26, 2010 and the week of May 3, 2010. If the Court

determines that an evidentiary hearing is required, the parties shall agree upon and submit to the

Court for its approval a schedule for the conduct of such hearing as well as for the exchange of

witness lists, exhibit lists, and deposition designations applicable to such hearing.



Dated: New York, New York October 27, 2009

s/ James M. Peck . UNITED STATES BANKRUPTCY JUDGE

A. 171

Intentionally left blank

A. 172


‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ x In re LEHMAN BROTHERS HOLDINGS INC., et al., Debtors.

: : : : : : :

Chapter 11 Case No. 08‐13555 (JMP) (Jointly Administered)

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐ x

REPORT OF ANTON R. VALUKAS, EXAMINER

March 11, 2010

Jenner & Block LLP 353 N. Clark Street Chicago, IL 60654‐3456 312‐222‐9350 919 Third Avenue 37th Floor New York, NY 10022‐3908 212‐891‐1600

Counsel to the Examiner

VOLUME 5 OF 9

Section III.B: Avoidance Actions

Section III.C: Barclays Transaction

2136

ASSETS LIABILITIES

Gov & Ag $40.0 ST Borrowings $0.0 Commercial Paper 1.1 Gov & Ag 21.0 Mortgages 2.7 Commercial Paper 0.0 Total Corp Debt 4.9 Mortgages 0.0 Corp Equity 8.8 Corp Debt 2.1 Derivatives 4.5 Corp Equities 6.3 Cash 0.7 Derivatives 4.5 _________________________________ _________________________________ Total $62.7 Total $33.9 Collateralized ST Agr 10.0 Collateralized ST Fund 34.5 Receivables 0.0 Payables 0.0 Other Assets 0.0 Deposits 0.0 Inv In Con Subs 0.0 Due to Subs 0.0 Due From Subs 0.0 Sub Notes 0.0 _________________________________ _________________________________ Total 10.0 Total 34.5 Total 68.4 Cure pmt 2.25 Comp 2.0 _________________________________ _________________________________ Adj. Total Assets $72.65 Total $72.65

Witnesses interviewed by the Examiner have different impressions of whether

the sale transaction was supposed to be a “wash” (other than $250 million for the

goodwill). For example, Thomas Roberts of Weil described the sale transaction, as

closed, as very similar to the transaction contemplated in the APA.7870 Roberts indicated

that both deals entailed (1) Barclays’ acquisition of assets and liabilities at a “wash”;

(2) the purchase of the 745 Seventh Ave. headquarters and other real estate assets at

appraised values; (3) the payment of $250 million for goodwill; and (4) job protection

55 (testifying that the schedule represented a summation of the liabilities that Barclays would assume and the assets it would acquire). 7870 Examiner’s Interview of Thomas A. Roberts, Apr. 28, 2009.

2137

for roughly 10,000 employees for 90 days.7871 Roberts stated that Barclays eventually

bought the assets and liabilities generally at a wash, albeit in a smaller amount than

originally contemplated. The “final schedule” of assets and liabilities dated

September 16 circulated in connection with the transaction showed an equal amount of

financial assets and liabilities being transferred to Barclays,7872 as did the manila folder

used by Michael Klein during the closing weekend to sketch out the terms of the

transaction for the Creditors Committee.7873

James Seery indicated, however, that the sale transaction was intended to

maintain the broker/dealer enterprise value.7874 In Seery’s mind, the transaction did not

involve the concept of a “wash” sale or transfer of a balanced book of assets and

liabilities; rather, he viewed the transaction to simply involve the purchase of all

securities positions (no matter the value) relating to the broker/dealer business.7875 Seery

indicated that when the Debtors and Barclays reached an agreement on Tuesday,

September 16, all of the parties understood that the population of long and short

positions would change before the transaction closed because, among other things,

counterparties were closing out their trades with LBI. 7876 Seery indicated that he did not

know, however, whether there was an agreement concerning what would happen if the

7871 Id. 7872 Lehman, Final Balance Sheet (Sept. 16, 2008) [BCI‐CG00033742]. 7873 Michael Klein, consultant retained by Barclays, Notes on Folder [Deposition Exhibit 338B]. 7874 Examiner’s Interview of James P. Seery, Jr., Nov. 12, 2009, at p. 2. 7875 Id. 7876 Id.

A. 173

A. 174

A. 175A

A. 175B

A. 176

A. 177

From: CATHYTon behalfofTurner, Cathy: Human Resources

Sent: Wed, 17 Sep 2008 00:35:44 GMT

To: Varley, John: Group Exec

CC: Lucas, Chris: Group Exec

SUbject: Confirmation

John

The release went out subject to the assets and liabilities numbers being finally confirmed at US$72bn IUS$68bn and including asentence, well down the text, for the total consideration of US$1.75bn.

Acopy is attached.

Congratulations.

Cathy

Calhy TurnerBarclays HR DirectorT: 02071162933PA: Jo Barry

EXHIBIT

.1 LJ-LrA

HIGHLY CONFIDENTIAL BCI-EX-(S )-00053482

i'BARCLAYSThls announcement shall not constitute an Mfcr lo:;ell nr Ihe S~)llCl(<ltlon \)!" an oller to buy ,my xculit:es, norshall there be allY sale or purchase of securities in any jurisJioi\m in which such O!1'er, $olicitatltlll or sale\voulJ be unlawful jll lor 10 rt:gi stnl Lioll or qmlilicatioTl ullder the securities laws of any such jurisdicti()fJ.

Fur immediate rclca~c 17 Sel'lCmhcr 2008

Barcla)'s announces agreement to acquire Lehman BruthcnNorth American investment b:'U1king and capital markets businesses

'lllC Board of BarcJays UIIDOUl1CCS that Barclays has agreed, subject to US Court and relevantreguluwry approvals, to acquire Lehman Brothers North American investment banking and capitalmarkets operations and supporting infrastructure. The tnlllsaction will create a premier integratedglobal bulge bracket investment banking company with a leading presence in all major markets andacross all major lines of business including: equity capital markets, debt capital markets, mcrgersand acquisitions, conmlOditics trdding and foreign exchange.

Barclays will acquirc rrading assets with a ClUTCIlt estimated value of £40bn (US$72bn) and trailingliabilities with a current estimated value of £38bn (US-1l68bn) for a cash consideration of £O.14bn(US$O.25bn). Barclays will also acquire the New York hcadqu.1rters of Lchmall Brothers as wcll asits two data centres at close to their current market value.

In response to this opportunity, certain Barclays shareholders have expressed support for thetransaction and interest in increasing rheir shareholdings in Barclays. The Board of Barclaysexpects these discussions to lead to a subscription of at least fO.6bn (US$lbn) of additional equity.TIle proposed transaction with Lehman Brothers and the additional equity would result in anenhancement of Barclays eamings and capital ratios.

Commenting on this announcement, John Varley, Barclays Group Chief Execurive, said:

"The proposed acquisition of Lehnlan Brothers North American investment banking and capitalmarket operations accelerates the execution of our strategy of diversil1cation by geography andbusiness in pursuit of profitable growth on behalf of our shareholders, in particular increasing thepercentage of Barclays earnings sourced in North America. This transaction delivers the strategicbenefits o[ a combination with Lehman Brothers core franchise, whilst meeting Barclays strictfinancial criteria, and strengthening our capital ratios."

Robert E Diamond Jr, Barclays President, said:

;'This is a ollce in a lifetime opportunity [or Barclays. We will now have the best team and mostproductive culture across the world's major financial markets, backed by the resources of anintegrated lUliversal bank. We welcome the opportunity to add Lehman's people and capabilities tothe BarcJays te<1m."

Herbert H McDade [II, Lclunan Brothers Chief Operating Officer, said:

"Lehman Brothers strength has always been our client Ij·anchisc. With this transaction, we lliwe theopportunity to continue the growth and development of Ollr US investment banking and capitalmarket franchises \Vlth one of the leading financial institutions in the world. Together 'vvith

HIGHLY CONFIDENTIAL BCI-EX-(S)-00053483

BarcJ<1Ys. these husinesses will be a part of a globl financial services powerhouse delivering acomprehensive sui tc of pr(xlucts alld services to our clients."

2


1. Transaction Strudure

TIle Lehman Brothers opcralions (0 be acquired in the trnnsaclion (the 'Acquisition') haveapproximately 10.000 employees, tr,l(ling ,)$SC($ currently estimated to bave a val\lc of £.\Obn(USS72bn). and liabilities currently cstim3tcd to h3vc a value of ORbn (US$6gbn) The LchmilnBrothers operations include Lehman Brothers North American fixed income and equities sales,trading and research and investment hnnking businesses (the 'Lehmnn Brothers businesses').Lehman Brothers will receive fO.14bn (US$O.2Sbn) ill cash as consideration for the LehmanBrothers businesses.

I3arclays has also agreed to acquire Lehman Brothers New York Hc.:'ld Office at 745 SeventhAvenue and t\\lO data centres in New Jersey for close to their current market value, estimated at£O.8bn (US$I.5bn). The combined consideration totals some £1 ,Obn (US$1.75bn).

TIle Acquisition is subject to a Humber of conditions including the approval of the United StatesBanknlptcy Court for the Southern District of New York. Lelunan Brothers is filing an emergencymotion with the Bankruptcy Court to seck a hearing to obtain approval for the Acquisition. TheAcquisition is also subject to certain usual conditions including receipt of necessary regulatoryapprovals and US antitrust cle'lrances. The agreement for the Acquisition may be terminated ifit isnot completed by 24 September 2008.

2. Trausaction Benefits

11w Acquisition will combine two strong client franchises and product offerings, with (he potentialto create significant value for Barclays shnrcholders. 111e Lehman Brothers businesses are a highlycomplementary fit for Barclays investment banking business, Barc1ays Capital. The combinedbusiness will be a premier global investment bank with an increased presence in the US and anenhanced product offering. Among other benefits, the combination of the two businesses will:

confirm BarcJays Capital as n Ic.1ding debt capital markets house globally;have a top J position in the US capital markets, the largest in the world;extend Barclays Cnpital's range of investment banking products, with the addition of LehmanBrothers strong US M&A and equity capital markets franchises; andstrenb'thell Barc1ays Capital's hedge fund franchise through the addition of prime brokerage andcash equity capabilities.

TIle Acquisition will result in the proportion of Barc1a)'s revenues derived from the US risingsignificantly. Given the strong cultural fit. BarcJays intends to achieve a rapid integration so as tominimise disruption to employees, clients and counterparties.

3. BarclilJs CUITcnt Trading

Barciays has traded satisfactorily in July and August. The monthly run rate for the Group's profitbefore tax in these months was slightly lower than the average for the first half of the ycar,reflecting usual scasonality. All businesses were profitable.

~. Employees and Management

Barc!ays believes the Lehman Brothers businesses have an exceHellt team of people whose skills.capabilities and culturc provide a good fit with Barc1ays and its clients. Darclays looks forward towelcoming thcm to our team and \vorking togcthcr to deli vcr the combination's full potcntial.

HIGHLY CONFIDENTIAL BCI.EX-{S)·00053485

The acquired businesses will be merged into Barclnys CapitaL which forms part of BarclaysInvestment Ba.nking and Investment Management of which Robert E Diamond Jr, is ChiefExecutive.

5. Share Issue

Further details of the expected issue of nc\v shares in cOllncction with the Acquisition will bepublished in due COtlrse.

6. Advisers

Barclays Capit:ll, Credit Suisse Securities (Europe) Limitcd. Dcutsche Bank AG, London Branchand JPMorgan Cnzenove Limited nre acting as financial advisers to BarcJnys. Credit SuisseSecurities (Europe) Limited and lPMorgan Cazcllove Limited arc joint corporate brokers toBarclays. Clifford Chance LLP and Cleary Gottlieb Steen & Hamilton LLP are acting as legaladvisers. to Barclays.

7. Analyst and Investor conference call

A conference call for analysts and institutional investors will be hosted by John Varley, Barc1aysGroup Chief Executive and Robert E Diamond Jr, Barclays President. TIle call will commence at12.00pm (BST) 17 September 2008.

To access the live conference call please dial 0845 401 9092 (UK callers) or +44 20 3023 4419 (allother locations). Access code: "Barclays Atmouncel1lent". A live webcast of the conference callwill also be available at www.barclays.com/investorrelntions.

A replay of the conference call and webcast will be available after the event. Access will beavailable via the Barciays investor relations website at the above address.

For further information please contact

Investor RelationsMark Mcrson+44 (0) 2071165752

John McIvor+44 (0) 20 7116 2929

Media RelationsLeigh Bruce+44 (0) 7826 910292 / +44 (0) 2077737371

Simon Eaton+44 (0) 7917 068479/ +44 (0)20 3134 2111

Peter Truell+12124127576/+19178268636

Barclays Capltal, which is authorised and regulated in the United Kingdom by the Financial ServicesAuUlOrity, is acting for Barclays PLC and Barclays 8ank PLC and for no one else as joint financial adviser lfl

connection with the Acquisition and \vill not be responsible to any other persoll for providing the protectiollsafforded to clients of Barclays Capit.al nor for advicc in connection with the Acquisitim or the contents of this[UlIHJWH.;Clllent or any {Hiler mattL'T:; referred to mIllis annutlrlcl.::ml.::nL

Credit Suisse Securities murope) Lllnitcu CCrL"(ht Suisse"), which is auUlOriscd lwd regulated ill the UnitedKingdom by the Fina.ncial Serviccs /\uUlority, is ading asjoint iinr-ncial adviser ilndJoint corpOnttc broker (0Bardayj Bank PLC find I3nrclays PLe flnd is acting for no-one else in connection \\olth the AequisitlOfl, ur.d\1,·ill not be responsible to anyone lIther th,m Barclay::; Rank PCC ilnd Barclays pte for provicing the

4


protections al!l)f{lcd to ;,;llslOlJlcrs o( Credit Sllis~ nor II)r providing advice to [Jny other person in rebt ion lo

Ull': AcquIsition or lilly olhl'f mailer rclc.Tcd to herem.

rku!sd1C Bank AG, London branch, 1S nUUlllrlscd tinder Gennilll Danking Law (cllTl1petcnt nuthonty: UaFin ~

Fcdtral Finallclal Supcl\"lsing ,\uthllllty) ;md regulated by the hn;lllCl<ll SCf\'icc$ r\uulOrity fix thc conduct orUK bUSllle~~, DcutS\.:he !lank :\G, London branch, IS actin!!. as juillliinancial adVISor rill Harcl:lYs Bank PLCand 8arcJays pte <Int! no one else in connection with the Acquisition and will !lot be respollsiblt.: to anyoneother than BiJr(;lays Ihnk PLe and narditys PI.C I'm providing the pnllediolls all'of"Lkd to the clients of[)(:lll$che Blink At;, London hraneh. or for providing advice in connection with the i\equiSl1iofl or any othernwtler referred t\} herein.

JPMnrgan ClIzclJove Lllllltcd ("JPMC"), which is authoriSt."'d and regulated in the United Kingdom by theFinancial SL.,.\.ice-<> Authority, i.'> acting ,1:-\ joint financial advisor ilnd jOl!lt corporn!c broker to £3areluys BankPLe and Barclays pte and 110-l)flC dsc in connection with the Acquisition, ;md will not be responsible toanyone ntller llWll Barclays Hank PLe <lnd Barel:l)'s PLC for providing the protc'etions atlorded to customersof JPMC nor for pwviding advice to ,IllY other person in rel<ltion to the Acquisition or any olher mallerherein,

Information on Barclays

Barclays is fI major global finHncill1 services provider engaged In retlli) and commercilll h.!mking, credit c~ll"ds,

invest.ment banking, w-caltll management and investment management services 'lliU, an extensive internationalpresence ill ElJl"npe, the United States. Ali:i,~n and Asia. With over 300 years of history and expertise inbanking, BarcklYs operates in over 50 countries and employs approxillwtcJy 147,000 peopl~. Hardays moves,lends, imcsts and protects money for over 42 million customers and clienls worldwide. For furu1erlll!OnnatlOn about Barclays, pleasl: VISit our webSite wwwbmclays.com.

Other information

The exchange rate ll.';Cd in this iHmounccmem is US$! 7935:£ 1.00 as published in the Financial Times on 16September 2008. Nothing in Ulis annOLUlecment is intended, or is to be construed, as a profit fort:Cast or to heinterpreted to mean Uwt cumings per B,uclnys shure for tlle current or future financial years, or those of theenlarged group, \".ill necessarily match or exceed the historical published earnings per Barciays share.

This annOlmeement shall not constitute an oner to sell or lhe solicitation of an offer to buy any securities, norshall tllCfe be any sale or purchase of securities in any jut"isdiction in which sueh otTer, soliciration or ~;ale

would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.


This annOWlccmcnt contains certain forward-](x)king S{JrClllcnt" WiUl respect to ccrtmn of Barclays plans andits CUHC'11t goals ilnd expectations relating to its future fifl<U1cial condition and perfonn,mce and which involven number of risks ttnd uncertainties. Barclnys cautions renders that no fonvard-looking statement is ngU;lf<lIltee 01" future performance :lml t1lM :.wtual results could diner materially from those contained in UleCorv,·ard-l<x-lking statements. ·lhesc ll}nv,lrd~lookingstatL'1l1Cnts e.u) be idenliJ1ed by the nlct lhal !hl:Y do notrc)ate only to historical or CIU1"et1t fads. Forward-looking statcments sometimes usc words such as 'aim','anticll)<ltc', 'larget', 'expect', 'esl/mille', 'intend', 'plan', 'go<.Jl', 'believe', or other words of similarmeaning. Examples of fonvard-hxlking statements include, among others, statements regardingconsummation of the proposed acquisition of the Lehman BrolhL'fS businesses by Barclays wllhin ti)()expected timeframc and or. the cxpe.:ted tenn:-\ (if ut all), the benefits of the proposed acquisition of certain ofthe Lchnwll Brolhl...,.s businesses by Bmclays, including the l1chicvement of syncrgy targcts, Barclays future(inanc1<:t1 position. income grO\\1h, lInpainncllt charges, business strategy, projected cost~, estimales oi· capilillexpenditure and revenuc benefits, proy.:clcd levcls of gro\qh in the banking and fmandal markets, theenlarged group's lutw·c fimlllcl<il and operatmg results, t1.lturc financial position, projected costs, estimates ofcapital expenditure, and plllllS and objectives fur fUlure o))L'rations of Burdays Imd llle enlarged group andother statements that arc not historic,al tact.

5

HIGHLY CONFIDENTIAL BCI-EX-{S)-O0053487

ny [hcir nature, (Or\\'iJrtl-hlllklllg stu/enwnts invt>lve risk und uncerlainty bec,llusc they reJtlte to lilturC eventsalld CirC\llllst;mt'.('.s, including, hut not limited t~), UK domestic and gloh:d economic and bllsin~<;s conditions,the cffccts llf continued volatility in credit ll1arkets, markeHelntcd risks such IlS changes in interest rates andexchange rates, the policies and actions of govcllllllclHal and rcguliltory authorities, changes 111 legIslatIOn, lllc(urtht..'r development d standards and lIlterprctatlons \U1dcr Inll.n1<ltional Financial Re\xlning St,mdards("I FRS") applicable to past, curren! and futlU"e periods, cvolving practice:> \vith rt..'gard to Ihe interprdationand appJic..'\tioll \)( standards lUld(.1· IFl~S, the outcome of jlending and !uture litigaticlll, the :>UcCeSS of future<Icljuisitlom; and other strategic lIansactions alld tht im pad or competitiun - tI nlUn ber of which facto! s arebeyond narduys control. As a result, Blirclnys actual future results muy differ ml.llerinlly trom the plnns,goals, and CXPcc!,,(ions sel fOrlh in 13arclnys forwnrd-looking stalement:;. Any forward-looking statementsmade herein by or on bellal! of Barclays speak only iB of the wlte they are made Except as required by theFSA, the London Stock E:\change or applicable law, Barclays expressly Ji$Claims ;my obligation orundertaking to n::leasc publicly any updates or revisions to ,my forward-looking stfl\ements contained in this,lJInotmCL111<.;nl to rel1cet any changes in Barclays expectations with regard thereto or any ch'll1gcs in events,conditIOns or Circumstances on which UIlY such statement is ba~d. The readt..>r should, hmwvcr, consult anyadditional disclosures UJat 13afcl\IY:; has made or may make in document:; it has filed or may file with UleSEC.

Important information

The di$triblllion of this announcement to persons not resident in the United States and the United Kingdommay be alfectcd by the laws of the relevant jurisdictions. Such persons should intonn themselves about andobserve IIny applicable requirt-1ncnts.

NeithL>r U,e eontt..'11t of J3arclays website nor any website hyperJinks on such website ore incorporated in, orform part ol~ Ulis allllounCt..111ent.

6

HIGHLY CONFIDENTIAL BCI-EX-{S)-00053488

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"David lEINWANO<[email protected]>

091211200806:06 PM

To [email protected]. davfd.murglo@weitcom."finfey. John G" <[email protected]>

cc [email protected]@bardayscapital.com. "Robert P DAVIS"<[email protected]>. "Duane MCLAUGHUN"<[email protected]>

bee

Subject Fw: New Paragraph 13

See below. language from Barclays for the letter re the unwinding of the barclays repurchase

David LeJnwandCleary Gottlieb Steen & Hamilton LLPOne Uberty Plaza, New York NY 10006

t: +1 212225 28381 f: +1 2122253999

www.c1earygottlieb com I dlelnwand@CQsh com- Forwarded by David LEINWANOINYlCgsh on 0912112008 06:02 PM "Myers. Ken S.· <[email protected]>

21 september 2008 05:12 PM

Ken S. MyersSullivan & Cromwell LLP125 Broad StreetNew York, NY 10004Tel: (212) 558-4657Fax: (212) 558-3566

To "'[email protected]'" <[email protected]>cc

Subject Fw: New Paragraph 13

----- Original MessageFrom: [email protected] <[email protected]>To: Myers, Ken S.; Serota, DanielSent: Sun Sep 21 17:05:53 2006Subject: Re: New Paragraph 13

Please send to cleary team too.

----- Original Message -----From: Myers, Ken S. <[email protected]>To: '[email protected]' <[email protected]>; Smith, Richard: Legal(NYK); Serota, Daniel <[email protected]>Sent: Sun Sep 21 17:03:43 2008Subject: New Paragraph 13

WGM-LEHMAN-E 00014127

13. Barclays Repurchase Agreement. Effective at Closing, (i) all securitiesdnd other assets held by Purchaser under the September 18, 2008, repurchasearrangement among Purchaser and/or its Affiliates and LBI and/or itsAffiliates and Bank of New York as collateral agent (the "Barclays RepurchaseAgreement") shall be deemed to constitute part of the Purchased Assets inaccordance with Paragraph l(a) (ii) above, (ii) Seller and Buyer shall bedeemed to have no further obligations to each other under the BarclaysRepurchase Agreement (including, without limitation, any payment or deliveryobligations), and (iii) the Barclays Repurchase Agreement shall terminate.Additionally, the Notice of Termination relating to the Barclays RepurchaseAgreement dated September 19, 2008 is hereby deemed rescinded and void abinitio in all respects.

Ken S. MyersSullivan & Cromwell LLP125 Broad StreetNew York, NY 10004Tel: (212) 558-4857Fax: (212) 558-3588

This e-mail is sent by a law firm and contains information that maybe privileged and confidential. If you are not the intendedrecipient, please delete the e-mail and notify us immediately.

This e-mail may contain information that is confidential, privileged orotherwise protected from disclosure. If you are not an intended recipient ofthis e-mail, do not: duplicate or redistribute it by any means. Please deleteit and any attachments and notify the sender that you have received it inerror. Unless specifically indicated, this e-mail is not an offer to buy orsell or a solicitation to buy or sell any securities, investment products orother financial product or service, an official confirmation of anytransaction, or an official statement of Barclays. Any views or opinionspresented are solely those of the author and do not necessarily representthose of Barclays. This e-mail is subject to terms available at the followinglink: www.barcap.com/emaildisclaimer. By messaging with Barclays you consentto the foregoing. Barclays Capital is the investment banking division ofBarclays Bank PLC, a company registered in England (number 1026167) with itsregistered office at 1 Churchill Place, London, E14 5HP. This email mayrelate to or be sent from other members of the Barclays Group.

This message is being sent from a law firm and may containconfidential or privileged information. If you are notthe intended recipient, please advise the senderimmediately by reply e-mail and delete this message andany attachments without retaining a copy.

WGM-LEHMAN-E 00014128

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To:

cc:

From: Sell, Stephen: Markets (NYK)Sent: Sun, 21 Sep 2008 18:33:16 GMT

Joshi, Dixit: EDG (LDN)~ Moreira, Nicholas: EDG (NYK); Warren, Doug:Credit Derivatives (NYK); Hamilton, Tom: RMBS Trading (NYK); Harrison,Harry: Fixed Income (NYK); Dun: Mimi: Fixed Income (NYK); Stack, Tim:Futures (NYK); Ogeneski, Chris: Credit Markets (NYK); Ogeneski, Chris:Credit Markets (NYK); Frisbee, Richard: MJM (NYK); Leyhane, Nick: EDG(LON); Gradowczyk, Diego: EMG Mkts Trading (NYK); Graf, Michael: USDFI Agency & SAS Trading (NYK)King, Stephen: Markets (NYK); Walker, James: Finance (NYK); Rodefeld,John: Operations (NYK); Morton, Marcus: Finance (NYK); Ornstein, David:Markets (LON); Wiltett, Bradford: Credit Derivatives (NYK); Sheehan, James:Credit Derivatives (NrTTt<); Logezze, Joseph: rvrarkets (NYK); Scott, Ten:Finance (NYK); Yoss, Eric: Market Risk (NYK); Meili, Stephan: Market Risk(NYK); Murphy, Michael: Markets (NYK); Montgomery, Ian: Barclays Capital(NYK); Hamill, Paul: Markets (NYK); Rose, Charles: Credit Markets (NYK);OrciuoJi, Ralph: FI (NYK); Nakum, Anatoly: Credit Derivatives (NYK);Greenbaum, Rich: IT (NYK); Nigam, Rakesh: IT (NYK); Chinai, Neil: IT(NYK)

Subject: Bookings - Lehman Financing Facility

Folks,

I've received agreement/consensus from Stephen King and James Walker, we should progressdown the following path:

o We should book all positions from the Lehman Financing Facility to BCI (-45bnsecurities· see attached file)

o We should book based on the price within the BONY file, at least for Day 1o Positions should be booked to a separate book within BCI to keep the positions

segregated for now

If anyone has any questions, please let me know as soon as possible. J'm at x3012.

Open Issues/Questions:

• James Walker to confirm with Jonathan Hughes that we and Lehman are in agreementon the file/amount to be transferred from Lehman Financing Facility to BCI

• John Rodefeld and James Walker to get an answer on whether we are taking on theFOlWard positions (trades done by LEH last week)

HIGHLY CONl=lnJ=NTI41 RCI.F=X.tSl.00212311

• John Rodefeld and James Walker to confirm what settlement date we should use for thepositions we transfer from Lehman Financing Facility to BCI

• John Rodefeld - Can you please provide an Asset Control point person that we can dealwith for any securities which are not set-up in our systems. As a first step, can youadvise which ones are not set-up.

« ...»

Steve

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Debtors.

x : : : : : : : : : :



x : : : : : : : x


APPENDIX TO



APPENDIX VOLUME VII




APPENDIX INDEX VOLUME VII

App. Tab No.

Description

195 1/23/2009 (12:27 pm) email between Sriram Venugopalan and Yoonki Hong et al. (PwC-BarCap 00009368 - 00009390)

196 1/28/2009 (2:47 am) email between Jon Holloway and Michael Guarnuccio (PwC-BarCap 00009519 - 00009520)

197 Expert Report of John Garvey, dated March 15, 2010

198 Expert Report of John Olvany, dated March 15, 2010

199 Expert Report of John Schneider, dated March 15, 2010

200 Expert Report of Joseph Schwaba, dated March 15, 2010

201 Expert Report of Mark Slattery, dated March 15, 2010

202 Expert Report of Mark Zmijewski, dated March 15, 2010

A. 195

FILED UNDER SEAL PURSUANT TO

PROTECTIVE ORDER

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PROTECTIVE ORDER

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PROTECTIVE ORDER

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PROTECTIVE ORDER

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PROTECTIVE ORDER

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PROTECTIVE ORDER

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PROTECTIVE ORDER

A. 202


PROTECTIVE ORDER




Debtors.

x : : : : : : : : : :



x : : : : : : : x


APPENDIX TO



APPENDIX VOLUME VIII




APPENDIX INDEX VOLUME VIII

App. Tab No.

Description

203 Declaration of John Garvey, dated March 16, 2010

204 Declaration of John Olvany, dated March 16, 2010

205 Declaration of John Schneider, dated March 16, 2010

206 Declaration of Joseph Schwaba, dated March 16, 2010

207 Declaration of Mark Slattery, dated March 16, 2010

208 Declaration of Mark Zmijewski, dated March 16, 2010

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barclays combined

Documents

excerpt of pages

saunders deposition

hughes deposition transcript

johnson deposition transcript

kaplan deposition transcript

lewkow deposition transcript

malloy deposition transcript

rosen deposition transcript