Lehman bonds-notes

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Nov 5, 2008 7:26 pm

I have a client who owns a Lehman note, and obviously they have filed bankruptcy. Does anyone have experience with this type situation? I have never experienced this ,and do not know what to tell the client except that the bankruptcy court will have the final say in what they are paid. I also am concerned that there has been no communication to the client or myself concerning this investment. The transfer agent continues to show an interest payment but it is not paid, and there doesn't  seem to be anyone willing to tell the bond holder whatto expect. It is held in a brokerage account and even shows a market value, but they have no answers. If anyone has experience in what we should expect, I would like to hear about it.

Nov 8, 2008 1:45 am

Ednomore,

 
There was another thread which discussed the Lehman bonds. Do a key word search-it does have good information.
 
I only trade fixed income. As an update, I can tell you that the Lehman bonds that I see are not paying interest. When I have bid out these bonds, they are going for about $.13 on the dollar, depending on maturity. 
 
As I posted on the thread, the Lehman bonds with a death put typically are considered "senior" unsecured debt. The senior debt holders get paid prior to unsubordinated debt. However, what determines what your client may or may not receive is based on how much Lehman's assets are sold for.
 
In a bankrupcy, bond holders can recieve more bonds, stock, cash or nothing. It does take time---2 years is not unlikely.
 
Hope that helps.
Nov 10, 2008 7:05 pm

Lady,

Thank you for the info and it does help even though it may not be encouraging. It is difficult to explain how these highly rated companies fail so quickly.