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Appparently the trust preferred business is one of the profitable businesses which was promptly sold to Barclays right after the BK. So BK has no effect on trust preferred issues.

Can you provide some proof for this?

The data that I have available indicates that at least some of the trust preferred issues are still part of the Lehman BK.

Specifically, I spoke with an attorney at Weil, Gotshal & Manges about the XFH issue a couple months ago. She indicated that it is indeed an asset of the bankruptcy.

And when you go look at the most recent 8-K for the security mentioned in this thread, XKO, http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?F... it says

The Registrant is a wholly-owned, indirect subsidiary of Lehman Brothers Holdings Inc. (“LBHI”), which filed a voluntary petition (the “petition”) for relief under Chapter 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York on September 15, 2008 in a jointly administered proceeding named in re Lehman Brothers Holdings Inc., et. A1. under Case Number 08-13555. LBHI and its wholly-owned broker-dealer, Lehman Brothers Inc., have sold since September 15, 2008 significant businesses, including the sale on September 21, 2008 of the investment banking business to Barclays Capital Inc., which business included the employees who historically conducted the Registrant’s business.

which also indicates that while some of the business was sold to Barclay's, LBHI is still running XKO. If Barclay's was running XKO, the registrant would be Barclay's, not LBHI. Similar registrant statements can be found in other Lehman ABS trust preferred 8-Ks, like XFH.

The reason that the trust preferreds won't be affected by the BK is that they are held separately, as the trust, and are an asset of Lehman ABS, not a creditor. However, as an asset, if the BK judge determines that by calling the preferreds, they could bring more money to the BK estate than if they remain in place, they will be called. It's not clear to me if the BK itself is one of the criteria that would allow the trust preferreds to called prematurely.

Therefore, I stand by my statement Given the fact that Lehman Brothers (the Third Party that issued the Trust Preferred) is going through BK, there are probably some additional criteria that would be taken into consideration prior to any decision to call the security. Whether the BK makes a call more or less likely is not totally clear.

AJ
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