A group of unsecured creditors objected on Friday to a request by bankrupt Lehman Brothers Holdings Inc for more time to draft its reorganization plan, claiming the delay will cut into the $13 billion they say they are owed, according to court documents.
Lehman attorneys asked the court last week to extend until March 15, 2010 the period in which the company can propose a reorganization plan in the largest bankruptcy in U.S. history.
The current deadline expires on Monday and Lehman said it needed time to collect data and coordinate cases that span the globe.
The ad hoc group of unsecured creditors -- including Elliott Management Corp, King Street Capital Management LP and Paulson & Co Inc -- argued in the documents, filed in federal bankruptcy court in Manhattan, that Lehman is essentially being liquidated and therefore creditors should manage the process since they are the main beneficiaries.
Neither the managers of the enterprise, nor the Debtors' advisors ... are economically motivated to create value for the enterprise, they said in the filing. In contrast, the true stakeholders -- the creditors -- are effectively disfranchised and impaired.
The group also criticized Lehman's disclosure practices, saying Lehman's Monthly Operating Report for June 2009 was one line long.
Lehman filed for bankruptcy in September 2008 as confidence evaporated from financial markets.
The committee's filing also criticized a fee structure that it says encourages restructuring advisers, Alvarez & Marsal, to drag out the time it spends managing Lehman. Alvarez & Marsal has so far earned fees of about $115 million.
Including the fees paid to Alvarez & Marsal, Lehman paid a total of $262.6 million in legal and consulting fees between September 2008 and June.
Lehman Brothers attorneys did not return calls seeking comment.
The case is In re Lehman Brothers Holding Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.
(Reporting by Tom Hals and Phil Wahba; editing by Andre Grenon)