Lehman Brothers may separate its illiquid assets and put them in charge of two standalone companies, and under the plan, the creditors of the collapsed American entity would get stocks rather than cash.
"Creditors of Lehman Brothers would receive stock rather than cash under a plan that could separate its illiquid assets into two companies, which would force them to wait for repayment but potentially boost their returns," the Financial Times has reported.
Quoting Bryan Marsal, co-head of Alvarez and Marsal, which is managing Lehman's liquidation, the daily said that the plan would allow Lehman to cordon off difficult-to-sell assets and wait for the markets to improve.
Further, the plan would prevent the company from a "fire sale of its holdings", it added.
"It is now in its preliminary stages but, if it is adopted, the two standalone companies could be publicly listed within two years," the report published online said.
According to the daily, one of the companies would include Lehman's real estate holdings, now valued at $43 billion, while other illiquid assets, including private equity investments and proprietary investments such as its stake in Canadian renewable energy firm SkyPower, would be made into a second company.
Lehman had $12.3 billion in principal investments as of September 30, plus additional commitments that it had not yet funded, the report pointed out.
"Lehman, which filed for the largest bankruptcy in history in September, would distribute stock in those companies into a trust that would benefit its creditors. That stock would eventually be converted to cash as assets are sold," the Financial Times said.
