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Blavatnik Creation LyondellBasell May Face Kazakh Payment Probe – BusinessWeek

April 7, 2010 By

LyondellBasell, the bankrupt chemical company created by billionaire Len Blavatnik, may face a U.S. bribery probe after telling prosecutors about a potentially improper payment linked to a project in Kazakhstan, according to four people with knowledge of the matter.

LyondellBasell, which sought protection from creditors last year, told the Justice Department it uncovered conduct that raised “compliance issues” under the U.S. Foreign Corrupt Practices Act, according to a March 30 court filing in Manhattan. The FCPA makes it a crime for companies with U.S. operations to bribe foreign officials. A review of international holdings by a management team installed after the bankruptcy triggered the disclosure, said David Harpole, the company’s Houston-based spokesman.

“This is an active investigation,” Harpole said in an interview. “It’s not appropriate for me to comment on any details of that particular investigation. We are cooperating fully with the Department of Justice, and we are conducting our own internal investigation.”

Subsidiaries of LyondellBasell, based in Rotterdam, won court approval on March 11 for a disclosure statement, or rough outline of a reorganization plan. The company has said it plans to exit bankruptcy around April 30. While the probe would be unlikely to affect LyondellBasell’s emergence from bankruptcy, any FCPA investigation could result in fines and indictments, according to Evan Flaschen, chairman of the restructuring group at the Bracewell & Giuliani LLP law firm in New York. Flaschen isn’t involved in the case.

via Blavatnik Creation LyondellBasell May Face Kazakh Payment Probe – BusinessWeek.

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Lehman Report Shows Ex-GC’s Fight to the Bitter End | Law.com

March 15, 2010 By

Thomas Russo knows a thing or two about shepherding struggling financial companies through chaotic times. The former top lawyer for Lehman Brothers Holdings Inc. took on the unenviable task of becoming general counsel for embattled American International Group Inc. in February.

Now Russo’s old life as head lawyer of the collapsed Lehman Brothers is in the news again with the release of a 2,200-page bankruptcy examiners’ report. The New York Times called it the “Wall Street equivalent of a coroner’s report” because it lays out in minute detail how Lehman Brothers used accounting gimmicks to hide the bad investments that led to its demise.

Russo and Lehman’s legal department weren't blamed for the accounting chicanery, according to the report. But it shows that they were involved in negotiations with other financial institutions as the bank fought for its survival.

Russo relayed information between bank officials who were struggling in vain to obtain loans that would prop up the struggling 158-year-old company. Meanwhile, the report said another in-house lawyer drafted agreements with clearing banks that attempted to limit the financial impact of their demands for collateral. Russo declined to comment for this story.

And even as Lehman’s financial situation continued to unravel, Russo wanted to delay planning and preparing for bankruptcy, the report said. That’s because he believed as late as mid-September 2008 that the Federal Reserve would rescue the company.

That never happened. Lehman Brothers filed the biggest bankruptcy in U.S. history that same month. And the report laid much of the blame on devastating losses in mortgage-backed securities, along with demands for collateral against much-needed loans by Citigroup Inc. and JPMorgan Chase & Co.

The report by examiner Anton R. Valukas also cited the “materially misleading” accounting maneuvers that Lehman Brothers used to hide its precarious financial situation. The report said that one such move involved including collateral paid to clearing banks such as JPMorgan as part of its liquidity pool, so that the bank appeared to have more money on hand than it actually did.

via Law.com – Lehman Report Shows Ex-GC’s Fight to the Bitter End.

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Lehman to Judge: Make the Examiner’s Report Public Law.com

March 10, 2010 By

Lehman Brothers and its lawyers at Weil, Gotshal & Manges sent a clear message this week to the judge hearing Lehman’s bankruptcy case: Make public the full report about Lehman’s demise. In a motion filed Monday by Wei’s Harvey Miller, Lehman says it has cooperated fully with the special examiner investigating the bank's failure and has turned over more than 20 million pages of e-mail.

The examiner in the case, Jenner & Block chairman Anton Valukas, was given full subpoena power to investigate Lehman's epic fall, as previously reported in this space. Issues of particular interest include whether Barclays got a sweetheart deal when it purchased Lehman’s North American operations days after Lehman filed for bankruptcy; how Lehman shifted billions from unit to unit hours before its bankruptcy filing; and whether JPMorgan Chase acted appropriately as Lehman’s main lender, according to Bloomberg and our prior reporting.

via Law.com – Lehman to Judge: Make the Examiner’s Report Public.

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HSBC exposed sensitive bankruptcy data

December 7, 2009 By Leave a Comment

HSBC Bank says a bug in its imaging software inadvertently exposed sensitive data about some of its customers going through bankruptcy proceedings.

In notification letters made public Thursday, the bank said it had redacted sensitive information in Chapter 13 bankruptcy proof-of-claim forms that were filed electronically, but that the information turned out to be viewable “as a result of the deficiency in the software used to save imaged documents.”

An HSBC spokeswoman declined to elaborate on the cause of the problem, but said “a limited number of customers” were affected. HSBC has “no reason to believe customers' personal information may have been compromised,” she added via e-mail. The company sent letters to affected customers in October and is offering them one year of free credit monitoring.

Some customers of the following HSBC companies are affected: HSBC Taxpayer Financial Services, Beneficial New Hampshire and Household Finance Corporation.

According to documents filed Thursday with the New Hampshire Attorney General’s office, HSBC failed to completely redact information on forms that were filed between May 1, 2007, and Oct. 17, 2008. HSBC said it learned of the problem on July 9, 2009.

The data disclosed may have covered HSBC credit card, line-of-credit or mortgage information, the company said.

[continued] HSBC exposed sensitive bankruptcy data.

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Multinational Bankruptcies for a Global Recession

December 1, 2009 By Leave a Comment

Leyza Blanco is part of a bankruptcy law trend that is likely to shed its obscurity as multinational companies fight to survive the fallout of the global recession.

When the Miami-based GrayRobinson attorney filed a Chapter 15 action on behalf of a Bahamian client in October, it marked only the seventh time in four years such a case had been filed in South Florida.

Blanco has been involved with two of them.

“A client will seek Chapter 15 recognition because they are a foreign company that has U.S. assets,” she said. “That recognition permits the courts here to provide the equivalent of a bankruptcy stay for the benefit of the foreign companies that own the U.S. assets.”

Chapter 15 is relatively new. It emerged in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act, in concert with international agreements, to harmonize insolvency cases involving debtors, assets, claimants and other parties in proceedings involving more than one country. It replaced Section 304 of the Bankruptcy Code and even has its own Web site, Chapter15.com.

“Its sort of like the Geneva Convention of bankruptcy,” said Charles Tatelbaum, a partner in Adorno & Yoss Fort Lauderdale, Fla., office.

Such uniformity among countries is viewed as essential in a globalized economy.

“Its a global question of how to deal with corporations that span multiple jurisdictions,” said Greg Grossman, a founding shareholder at Astigarraga Davis, who filed the first Chapter 15 case in a South Florida bankrutpcy court in December 2006. “It really took its foothold outside of the U.S. first and was recommended into our bankruptcy system pretty much from abroad.”

[continued] Multinational Bankruptcies for a Global Recession.

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