Lehman CDS settlement: Market edgyMarket participants were tense Thursday as price settlement loomed on credit default swaps contracts tied to bankrupt Lehman Brothers Holdings Inc. The settlement prices will be determined Friday through an auction run by derivative firms Creditex Group Inc. and Markit Group Ltd. and could result in billions in losses for holders and sellers of Lehman CDSs, further roiling already stressed money markets. CDS contracts act as insurance policies to protect against the threat of debt default. Holders of debt securities buy protection from dealers such as Deutsche Bank AG, Goldman, Sachs & Co. and J.P. Morgan Chase & Co., and if default occurs, the CDS contract seller agrees to pay the buyer the face value of the debt security in question. According to the International Swaps and Derivatives Association Inc., once prices for the CDSs have been set, counterparties will have to settle their contracts. That event will take place on Oct. 21 and could cause more worry
. - Vipal MongaLehman seeks to sell hedge fund stakeThe dismantlement of bankrupt Lehman Brothers Holdings Inc. has continued with the proposed sale of its 45% stake in R3 Capital Management LLC back to the hedge fund for $250 million cash and an investment in another R3 Capital Partners fund. Lehman is asking the court to approve the sale on an emergency basis -- similar to the sale of its interest in gas and electricity supplier Eagle Energy Partners I LP -- because of the assets' deteriorating value. Both sales will be considered on Oct. 16. -
John Blakeley
Asarco, Grupo Mexico far apart on damagesBankrupt Asarco LLC and parent Grupo Mexico SAB de CV are bickering over damage claims the parent could be required to pay under a federal judge's ruling that the parent committed fraudulent conveyance. Asarco and nonbankrupt Grupo Mexico are bickering over whether the parent should pay up to $7 billion in fraudulent conveyance damages or merely the $50 million to $200 million that the parent would prefer. Asarco will present the $2.4 billion settlement as part of a plan it will ask Judge Richard Schmidt in U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to approve on Nov. 17. Grupo Mexico will present a rival plan to the judge on the same day.
-Terry Brennan
