Lehman sale to Barclays Upheld:

On February 22, 2011, the United States Bankruptcy Court in New York City ruled

that Lehman Brothers Holdings Inc.’s and Lehman Brothers Inc.’s Section 363 sale of

their brokerage business to Barclays Capital Inc. days after Lehman’s Chapter 11

filing on September 15, 2008 was proper. In a 103-page opinion, Judge Peck denied

Lehman’s motion to modify the Section 363 Sale Order and ruled that the “sale

process may have been imperfect, but it was still adequate under the exceptional

circumstances” of the Lehman case. The Court noted that there was an “undeniably

correct” perception that the sale “mitigated systemic risk” and avoided “an even

greater economic calamity.” This ruling, which will likely be appealed, will be

viewed as a victory for the sanctity of Section 363 sale orders. With almost $11 billion

of value at stake, the ruling will materially diminish the potential dividend to

creditors.

David H. Conaway, Shumaker, Loop & Kendrick, LLP

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