Some three years after filing for Chapter 11 protection, Lehman Brothers Holdings Inc. is close to wrapping up the in-court phase of its liquidation.

Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Tuesday, Aug. 30, approved the disclosure statement for Lehman's liquidation plan and scheduled a confirmation hearing for Dec. 6.

Creditors of the former New York investment bank will have until Nov. 4 to vote on the plan.

The revised second amended plan, filed Aug. 24, separates the creditors of each of 23 bankrupt affiliates and does not substantively consolidate the debtors. It does, however, reallocate a portion of distributions from certain classes of creditors that would receive a lower distribution with substantive consolidation to creditors that would benefit from substantive consolidation.

The plan allows Lehman to unwind its remaining holdings, including real estate, commercial loans and private equity and principal investments, in the years following the effective date of the plan. Lehman estimated, for example, that liquidating its real estate would produce $13.2 billion in gross proceeds over the four years ended Dec. 31, 2014. Loans and investments would add an additional $4.8 billion and $9.5 billion, respectively.

Lehman would pay its administrative, priority and secured claims in full.

LBHI senior unsecured creditors would receive an estimated 21.1% recovery through a pro-rata share of available cash, while senior intercompany claimholders would receive a 15.6% recovery through available cash.

LBHI's general unsecured creditors would receive an estimated 19.9% recovery from available cash.

If senior unsecured creditors and general unsecured creditors voted to accept the plan, however, 20% of the distributions of senior third-party guarantee claimholders would go to those creditors that voted in favor of the plan.

Holders of intercompany claims would recover 14.4% in available cash. Subordinated claims and equity would be wiped out.

Lehman affiliate Lehman Brothers Commercial Paper Inc. would repay its secured creditors in full in cash.

LBCP would give its general unsecured creditors an estimated 55.7% recovery in cash. Holders of LBCP intercompany claims would receive a 46% to 52.1% recovery in available cash, and equity holders would be wiped out.

Certain LBCP creditors would also have to share a percentage of their distribution depending on if certain other classes of creditors voted to accept the plan.

The recoveries for creditors of other Lehman affiliates are all different.

The official committee of unsecured creditors supports the plan, along with parties holding in excess of $100 billion in claims, including Barclays Bank plc, Deutsche Bank AG, Goldman, Sachs & Co., Morgan Stanley, Paulson & Co., Silver Point Capital LP and UBS.

Lehman creditors had filed two competing plans, but they will not go forward following Peck's July 21 approval of an agreement with their proponents.

As a result of the stipulation, neither group -- an ad hoc creditor group and the "nonconsolidation plan proponents" -- will pursue confirmation of its proposal. They also agreed to stay all discovery related to each other's plans or disclosure statements.

Lehman, which owned investment banking, asset management, real estate and other assets, filed for bankruptcy on Sept. 15, 2008, after the collapse of a federal government-led effort to save it because of massive mortgage securities losses.

On Sept. 22, 2008, it closed the sale of most of its North American investment banking and capital markets business to Barclays for $250 million cash plus the assumption of roughly $45 billion in liabilities. Many other deals followed.

Harvey Miller, Lori Fife and Alfredo R. Pérez of Weil, Gotshal & Manges LLP are debtor counsel. Bryan Marsal of Alvarez & Marsal LLC is chief restructuring officer. Barry W. Ridings of Lazard is LBHI's investment banker.

Dennis F. Dunne and Evan Fleck at Milbank, Tweed, Hadley & McCloy LLP represent the creditors' committee. Eric Siegert of Houlihan Lokey Inc. is investment banker for the committee.