Lehman Brothers, thought by many to be gone but not forgotten, turns out to be neither. It continues on not as a going concern so much but as a matter of litigation, and Spanish Broadcasting System turned up during the process – Lehman says SBS owes it money, and SBS says that claim is nonsense.
LB says it was a holder of preferred stock and is owed $29.36M for unpaid dividends. Further, according to a Bloomberg report, it says the lack of payment prohibited SBS from taking on additional debt, rendering illegal financial transactions during 2011 and 2012 worth hundreds of millions in new debt including a $275M refi.
LB, which filed the case in Delaware Chancery Court, is also seeking damages.
SBS took issue. It stated, “The Company denies the allegations contained in the Lehman complaint and, to the contrary, asserts that it has been and continues to be in full and complete compliance with all of its obligations under the Certificate of Designations for the Series B Preferred Stock, as fully disclosed in the Company’s filings with the Securities and Exchange Commission dating back to 2009. Accordingly, the Company believes that the Complaint’s allegations are frivolous and wholly without merit and intends to contest such allegations vigorously. The Company has retained Skadden, Arps, Slate, Meagher and Flom LLP to represent it in connection with the Lehman action.”
SBS continued, “In addition, the Company notes that the day before the filing of the Complaint, the judge presiding over the Lehman bankruptcy proceedings denied Lehman’s objection to the Company’s Proof of Claim in an unrelated litigation in which the Company is asserting almost $50 million in damages as part of a Proof of Claim filed in 2009 relating to a Lehman affiliate’s willful failure, prior to its bankruptcy filing, to fund its commitment under the Company’s then extant revolving credit facility. A trial date has not yet been set for this matter.”