By Patrick Fitzgerald
Of DOW JONES DAILY BANKRUPTCY REVIEW
Lehman Brothers Holdings Inc. (LEHMQ) is suing Bank of America
Corp. (BAC) and Barclays PLC (BCS) to put the brakes on the
proposed sale of their interests in apartment company Archstone to
Sam Zell's Equity Residential.
In a lawsuit filed Thursday in U.S. Bankruptcy Court, Lehman,
which owns 47% of Archstone, said it would make a $1.325 billion
offer for a 26.5% stake in Archstone under its right of first
refusal.
Lehman is suing the banks for breach of contract and is asking a
judge for an injunction to block any transfer of the banks'
interests in Archstone to Equity Residential, Archstone's largest
competitor.
Lehman, which is still under bankruptcy protection, needs court
approval to match Zell's bid. A preliminary injunction, it says,
will give it time to make a $66 million right of first refusal
deposit and close a purchase by Jan. 23, 2012.
Lehman led a $22 billion leveraged buyout with Bank of America
and Barclays for Archstone in 2007 near the height of the real
estate bubble.
Since the investment bank collapsed into bankruptcy in September
2008, Lehman and the banks have been at odds over how to exit their
holdings in Archstone. Lehman favors an initial public offering for
Archstone, which owns stakes in more than 70,000 apartments, while
the banks favor a private sale.
Lehman believes Archstone's properties are worth at least $1
billion more than implied by Equity Residential's bid.
Last week U.S. Bankruptcy Judge James Peck signed off on
Lehman's $65 billion Chapter 11 plan. Proceeds from any Archstone
IPO and other property sales would eventually flow back to Lehman
creditors under the plan.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection)
-By Patrick Fitzgerald; Dow Jones Daily Bankruptcy Review;
202-862-3544; patrick.fitzgerald@dowjones.com
-Eliot Brown contributed to this article.