Are There Administrative Claims or Colorable Claims For Preferences or Voidable Transfers?

¶Section (B) addresses the first, second, third, fourth, seventh and eighth bullets of the Examiner Order:

[Bullet 1] Whether LBCC [Lehman Brothers Commercial Corporation] or any other entity that currently is an LBHI Chapter 11 debtor subsidiary or affiliate ("LBHI Affiliate(s)") has any administrative claims against LBHI resulting from LBHI's cash

sweeps of cash balances, if any, from September 15, 2008, the commencement date of LBHI's Chapter 11 case, through the date that such applicable LBHI affiliate commenced its Chapter 11 case.

[Bullet 2] All voluntary and involuntary transfers to, and transactions with, affiliates, insiders and creditors of LBCC or its affiliates, in respect of foreign exchange transactions and other assets that were in the possession or control of LBHI Affiliates at any time commencing on September 15, 2008 through the day that each LBHI Affiliate commenced its Chapter 11 case.

[Bullet 3] Whether any LBHI Affiliate has colorable claims against LBHI for potentially insider preferences arising under the Bankruptcy Code or state law.

[Bullet 4] Whether any LBHI Affiliate has colorable claims against LBHI or any other entities for potentially voidable transfers or incurrences of debt, under the Bankruptcy Code or otherwise applicable law.

[Bullet 7] The inter‐company accounts and transfers among LBHI and its direct and indirect subsidiaries, including but not limited to: LBI, LBIE, Lehman Brothers Special Finance ("LBSF") and LBCC, during the 30‐day period preceding the commencement of the Chapter 11 cases by each debtor on September 15, 2008 or thereafter or such longer period as the Examiner deems relevant to the Investigation.

[Bullet 8] The transactions and transfers, including but not limited to the pledging or granting of collateral security interest among the debtors and the pre‐Chapter 11 lenders and/or financial participants including but not limited to, JPMorgan Chase, Citigroup, Inc., Bank of America, the Federal Reserve Bank of New York and others

¶The Examiner has identified approximately $60 million of administrative claims.⁹³⁹³ See Section III.B.2 (discussing possible administrative claims).

¶The Examiner has identified colorable claims that there were a limited number of preferential transfers.⁹⁴⁹⁴ See Section III.B.3 (discussing possible avoidance actions).

¶The Examiner has determined that there are a limited number of colorable claims for avoidance actions against JPMorgan⁹⁵⁹⁵ The Examiner notified counsel for JPMorgan of his tentative conclusion and counsel made a presentation in response. The Examiner carefully considered that presentation but concludes that a colorable claim exists. and Citibank.⁹⁶⁹⁶ See Section III.B.3 (discussing possible avoidance actions).

Do Colorable Claims Arise From Transfers of LBHI Affiliate Assets to Barclays, or From the Lehman ALI Transaction?

¶Section (C) addresses the sixth and ninth bullets of the Examiner Order:

[Bullet 6] Whether assets of any LBHI Affiliates (other than Lehman Brothers, Inc.) were transferred to Barclays Capital Inc. as a result of the sale to Barclays Capital Inc. that was approved by order of the Bankruptcy Court entered September 20, 2008, and whether consequences to any LBHI Affiliate as a result of the consummation of the transaction created colorable causes of action that inure to the benefit of the creditors of such LBHI subsidiary or affiliate. [Bullet 9] The transfer of the capital stock of certain subsidiaries of LBI on or about September 19, 2008 to Lehman ALI Inc. In the course of reviewing whether affiliates other than LBI were adversely

¶impacted by the Barclays sale, the Examiner reviewed the facts related to the transfer of LBI assets in the post‐filing sale to Barclays. Because the issues related to the sale are the subject of active, pending litigation filed by the Debtors, on which discovery is far from complete, the Examiner expresses no view on the merits of that litigation and will limit himself to setting out the factual record he has developed on the issues.⁹⁷⁹⁷ See Section III.C (discussing the Barclays sale transaction).

¶The Examiner concludes that a limited amount of assets of LBHI Affiliates other than LBI were improperly transferred to Barclays.⁹⁸⁹⁸ See Section III.C (discussing the Barclays sale transaction).

¶The Examiner concludes that the transfer of capital stock to ALI served a legitimate purpose and that there was no impropriety in those transactions.⁹⁹⁹⁹ See Section III.C (discussing the Examiner's conclusions regarding the Lehman ALI transaction).

¶II. PROCEDURAL BACKGROUND AND NATURE OF THE EXAMINATION