2010-04-26 Lehman Hearing Transcript Amended
2010-04-26 Lehman Hearing Transcript Amended
2010-04-26 Lehman Hearing Transcript Amended
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Debtors.
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9:36 AM
B E F O R E:
TRIAL
5 Marsal, and Houlihan Lokey [Case No. 08-13555, Docket No. 8331]
6
7 HEARING re Statement of the Securities Investor Protection
10 Relief Under Rule 60(b) [Case No. 08-1420, Docket No. 2989]
11
12 HEARING re Objection of HWA 555 Owners, LLC to the Motions of
16 September 20, 2008 Sale Order and for Other Relief [Case No.
17 08-13555, Docket No. 5419; Case No. 08-01420, Docket No. 1911]
18
19 HEARING re Objection of SunGard Entities to the Motion of the
23
24
25
4 Holdings Inc. [Case No. 08-13555, Docket No. 5422; Case No. 08-
6
7 HEARING re Statement of the Bank of New York Mellon Trust
9 the September 20, 2008 Sale Order and Granting Other Relief and
10 (II) to Unseal Motions for Relief from September 20, 2008 Sale
11 Order (and Related SIPA Sale Order) [Case No. 08-13555, Docket
12 No. 5424]
13
14 HEARING re Objection of SunGard Entities to (1) the Motion of
15 the Debtors for an Order Modifying the September 20, 2008 Sale
16 Order and Granting Other Relief and (2) the Motion of Official
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20
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7 Relief Pursuant To The September 20, 2008 Sale Orders; And (II)
11
12 HEARING re Australia & New Zealand Banking Group LTD's Letter
14
15 HEARING re LibertyView's: (A) Joinder to (i) the SIPA Trustee's
17 for Relief from the Sale Orders or, Alternatively, for Certain
19 Capital Inc.'s Motion to Enforce the Sale Order [Case No. 08-
20 13555, Docket No. 7417; Case No. 08-01420, Docket No. 2775]
21
22
23
24
25
3 the Committee's Motion and (III) LBHI's Motion for Relief from
6 Motion to Enforce the Sale Order [Case No. 08-13555, Docket No.
8
9 HEARING re Motion of Debtor to Modify the September 20, 2008
10 Sale Order and Granting Other Relief [Case No. 08-13555, Docket
11 No. 5148]
12
13 HEARING re Motion of the Trustee for Relief Pursuant to the
16
17 HEARING re Motion of Official Committee of Unsecured Creditors
24 Order [Case No. 08-13555, Docket No. 5169; Case No. 08-01420,
4 08-13555, Docket No. 6814; Case No. 08- 1420, Docket No. 2581]
5
6 HEARING re Trustee's Adversary Complaint [Adv. No. 09-01732,
7 Docket No. 1]
8
9 HEARING re LBHI's Adversary Complaint [Adv. No. 09-01731,
10 Docket No. 1]
11
12 HEARING re Creditors' Committee Complaint for Declaratory
15 Docket No. 1]
16
17
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20
21
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23
24 Transcribed by: Clara Rubin
25
3 JONES DAY
7
8 BY: ROBERT W. GAFFEY, ESQ.
10
11 BOIES, SCHILLER & FLEXNER LLP
14 Washington, DC 20015
15
16 BY: HAMISH P.M. HUME, ESQ.
18
19 BOIES, SCHILLER & FLEXNER LLP
22 4th Floor
23 Albany, NY 12207
24
25 BY: TRICIA J. BLOOMER, ESQ.
5 Suite 1200
7
8 BY: TODD THOMAS, ESQ.
9
10
11 BROWN RUDNICK LLP
15
16 BY: HOWARD S. STEEL, ESQ.
17
18
19 EMMET, MARVIN & MARTIN, LLP
21 Limited
22 120 Broadway
24
25 BY: KENNETH M. BIALO, ESQ.
7
8 BY: K. BRENT TOMER, ESQ.
9
10
11 HUGHES HUBBARD & REED LLP
15
16 BY: WILLIAM R. MAGUIRE, ESQ.
17
18
19 KASOWITZ BENSON TORRES & FRIEDMAN LLP
21 1633 Broadway
23
24 BY: JONATHAN E. MINSKER, ESQ.
25
4 65 Livingston Avenue
5 Roseland, NJ 07068
6
7 BY: MICHAEL S. ETKIN, ESQ.
8
9 OTTERBOURG, STEINDLER, HOUSTON & ROSEN, P.C.
13
14 BY: JOHN BOUGIAMAS, ESQ.
15
16 QUINN EMMANUEL URQUHART OLIVER & HEDGES, LLP
18 Creditors
19 51 Madison Avenue
20 22nd Floor
22
23 BY: SUSHEEL KIRPALANI, ESQ.
25
4 Creditors
7
8 BY: ERICA P. TAGGART, ESQ.
9
10
11 SECURITIES INVESTOR PROTECTION CORPORATION
13 Suite 800
14 Washington, DC 20005
15
16 BY: KENNETH J. CAPUTO, ESQ.
17
18
19 CHAPMAN & CUTLER
22 Chicago, IL 60603
23
24 BY: JAMES HEISER, ESQ. (TELEPHONICALLY)
6
7 BY: WHITMAN L. HOLT, ESQ. (TELEPHONICALLY)
9
10
11 AURELIUS CAPITAL MANAGEMENT
12 Interested Party
14
15
16 BANK OF AMERICA
17 Creditor
19
20
21 FARALLON CAPITAL MANAGEMENT
22 Creditor
24
25
4
5
6 VARDE PARTNERS
7 Creditor
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
13 know.
16 probably better to get that out of the way first, at least from
6 this case, and that statement makes clear SIPC's position that
18 submits, Your Honor, that the trustee's motion for relief has
24 here?
25 (No response)
2 SunGard?
3 (No response)
10 fact that those shares were merely lent to LB -- or, I'm sorry,
14 adversary proceeding.
16 implicate, and may perhaps validate, the claims we've made with
19 well. Barclays has argued along the way that the sale order
20 bars our claims and that we've waived our claims by failing to
4 (No response)
7 Tokyo-Mitsubishi?
14 on the day LBI's SIPA liquidation was filed. Issue was joined
23 to the extent the Court issues any such rulings, the Court
25 to whatever rights and claims that the Bank of Tokyo and the
3 adversary proceeding.
14 obvious.
16 Your Honor.
23 the LBI obligations under the accounts, but the OCC drew these
4 Barclays takes not only the OCC margin but the specific letter-
8 agreement, which states that Barclays not only would take the
13 the OCC margin or is entitled to the OCC margin but Your Honor
16 then the issue of whether the OCC needs to pay that back to
20 Honor.
2 that's on deposit with the Court, twenty million and change are
3 ours.
8 there has not been, as far as I can tell, any disagreement with
9 the notion that the issues in the interpleader case are in fact
18 comment one way or the other about your stipulation. And feel
14 of material that were filed, the one thing that struck us,
17 previously filed under seal but that were revealed for the
16 them, why aren't they being returned to us. This is the third
19 securities.
13 heard on this? I've gone through the list of third parties who
16 out.
17 (No response)
3 please.
7 the sale transaction and through to March 13th, 2009. And our
9 motions were filed, used that cutoff because that was the date
11 orders on appeal.
13 when the movants were supporting the sale and defending the
16 during that time, because -- and the reason for that, Your
20 agreed to, they chose not to seek reconsideration of, and they
25 matter of law require them to show that they simply did not
4 because they have to, and it's not because we forced them to;
5 it's because the law forces them to. They must show, for their
6 Rule 60(b)(2) claims, that they simply did not understand the
11 Honor, how they can clear those hurdles given what was publicly
12 announced and known about the sale at the time. And I don't
13 want to depart too much from this, but I would like to show
24 the press.
5 dollars.
9 Could you blow up, please, that paragraph and the one
23 price tag for what was roughly half the entire company appears
2 bank is paying just 250 million dollars for the business, and
4 billion dollars.
8 I'll note, in many of these articles notes from people who said
12 the deal. And yet the movants are here a year later saying the
17 modify the sale order that went up on appeal and was defended
20 about what the sale was all about. They must be saying that
25 A-2.
18 uncertainty. And now they've come back and asked you to redo
23 that slide. The papers filed by the SIPA trustee indicate that
8 the work that you're seeking to find out about? Why are they
12 out; to me, they are the hardest for the movants to defend
18 what were the assets and liabilities that LBI had when it came
19 into court for the SIPA liquidation, and to do that they have
5 correct?
18 "Q. Can I ask -- well, it seems like you were clarifying your
20 that?
23 "Q. Who was, then, doing the valuations for the draft balance
24 sheet?
6 "A. Yes.
7 "Q. When did Deloitte first work on in any way a balance sheet
8 for LBI?
9 "A. Started in late '08. We did not have access to the books
16 "A. Yeah."
5 sheet looked like, what they thought we were getting from that
7 claims. It's not work product. It's work they would be doing
15 it.
5 upon what was told to the Court, nothing to do with what the
6 movants knew.
10 way they can bring the claims they're bringing without showing
12 deal.
15 appeal. There are virtually none that have had any 60(b)
19 sale.
10 they did not understand what they were saying in the October
19 will indulge me, I know that last clip went on a little long,
21 discovery that we have not been able to get answers to. And
3 3:47 p.m. In this e-mail you say 'Houlihan has reviewed the
4 securities and cannot even come close to the amount which was
6 in its review?
9 question.
13 "A. Yes.
17 "Q. I'm just trying to help the Court see what the committee
19 "A. I understand.
25 "A. Yes.
13 "Q. You see that Mr. Despins says that Houlihan has reviewed
14 that and cannot even come close to the amount which was
19 privilege.
3 "Q. Okay. But do you recall how many billions more Houlihan's
14 MR. HUME: Since we're taking some time with this, can
15 we skip the next one and just show, finally, what Saul Burian,
19 "Q. In the time period between September 22, 2008 and the end
22 what you understood the Court had been told at the approval
23 hearing?
17 schedules are.
19 binder?
22 discount. You've been told by the movants that the secret five
24 Barclays received when it took over the New York Fed's repo.
4 was told had been delivered in the repo to Barclays before the
7 to Weil Gotshal.
20 exact number, they could have done it. They knew it wasn't
2 at it and said we don't think it's worth what it's marked at,
3 we think it's less, can we give you a precise number? No, but
9 different than what the Court was told and there was some big
15 them at the time the marks were wrong, our public financials
20 e-mail summarizing the marks like that, that they were sent at
2 then I won't take any more of the Court's time. There are
4 our motion from last year -- we are only now seeking the
8 all the way through to March of 2009 when they're defending the
9 sale order. They couldn't have been defending the sale order
14 show that their financial advisors couldn't figure this out and
15 gave them bad information and that's why they were justifiably
19 is simply not fair. It's not fair for them to come a year
20 later and say they didn't understand this CUSIP list that they
21 were given at the time, even though they had all these advisors
22 to analyze it. And now they're coming back to say that the
25 other way, to know what they really did think at the time, to
6 some case law that we think supports us, but that is our
7 argument.
16 for the record that Mr. Burian's deposition was taken on the
11 without fear that their work product will be used against their
16 communications.
21 case and the oral argument that was held on April 9th, because
2 timeliness.
13 by Your Honor and that was proved by Your Honor, that that
16 was told, and it examines the objective facts of what were the
19 Honor.
21 the sale hearing, Your Honor. We heard the number 47.4 billion
18 parties about what they told the creditors' committee and their
22 saw, a Deloitte & Touche witness, where they were asked the
23 very questions that they maintained that they had not access
24 now.
6 But they have been given the opportunity, Your Honor, to show
20 will not rehash the arguments that are set forth in our brief,
21 but there are three points that I would like to make. The
4 standard.
13 question 1.
3 in a bankruptcy case.
9 asking for a rule that any and all work product prepared by any
22 timing, I opened with this because Your Honor had asked about
23 this question, but I would just note again for the record that
24 this motion -- this issue was first raised in December, and the
19 the appeal of the sale order through June. We did not brief --
23 statement.
9 mystery. What Mr. Hume said in his argument was that the
14 told you that Deloitte was tasked immediately with doing work,
18 was tasked immediately. The testimony that you saw said that
19 Deloitte was asked at some point. And then we had the Deloitte
23 Deloitte didn't have access to the books any time before that.
11 explains why this motion was not brought before; it does not
12 explain why this motion was brought at all. And what we did
13 not hear from Barclays was the key standard in this circuit set
19 denied.
23 but I did want to point out a few things that are unique to
25 not a party to the prior motion that was brought before this
14 what assets had made it to Barclays and what was left in the
15 estate. So the notion that we've withheld things that are not
21 started off with an analysis of why the comp and cure numbers
22 didn't add up. But basically we've withheld the documents that
25 has had ample opportunity to take discovery from all the other
2 Marsal and Mr. Kruse who were taken shortly after the last
4 all those documents, all the former Lehman employees that now
17 mistake. Well, if you read our papers, and I would point you
18 to paragraphs 151 and 155 of our reply brief, the only mistakes
19 we allege are the ones that took place during the week of
22 related to that.
8 & Marsal faced when it first took over this estate. It had
11 all involved in this transaction who now work for Barclays, and
18 it's fine for them to argue that, and it's fine for us to
19 defend it, but the fact is there's no support in the case law
20 for the notion that a litigant can put its opponent's work
23 motion.
12 A-13, please.
14 provide more from the various privilege logs. These are the
3 committee, that we showed Your Honor two weeks ago, that talks
5 from Lehman's stale marks. Well, there they are talking about
6 it in November, and we don't know what they said. And it's not
8 of the sale.
15 you can say, well, it's possible there might have been
16 litigation.
23 argument that you heard from Mr. Hine, I would like to make
24 sure it's clear that Barclays produced all of the backup for
3 documents about our valuation going all the way down into all
4 the valuations.
8 I'm not just saying that rhetorically. Not all of them have
18 PricewaterhouseCoopers.
24 Secondly, Your Honor, the committee told the Court that they
3 Court and from Barclays what their analysis of that number was
4 at the time. They have placed it in issue what they think the
5 number was, but they won't reveal the documents that show what
8 heard from the movants, and the Erie case. And the Erie case
18 effort to comply with the laws. And the district court judge
3 60(b)(2) and the mandate rule require them to say that they
7 initially; they said no, no, no, we don't argue that. We said,
10 reply, while they try to dodge the issue, they say "We were
14 upon timeliness, that we need to know why they didn't bring the
15 motion sooner. That's very fuzzy. It's much more precise than
16 that. And the reason I'm talking about the mandate rule and
17 60(b)(2), those are the two things that require them to have
21 and modify the sale order that was affirmed on appeal. It's
22 jurisdictional.
23 And the only way, if there is any way -- and the law
5 sale on appeal.
21 the appeal.
25 it's before the end of 2008 they were working on it. And they
2 appeal.
4 appeal and telling the district court that all relevant facts
11 was within the scope of our earlier motion, which was a broad
15 included what we're asking for now. And the Court ruled that
17 September 30th.
23 Houlihan, that's right. I'm sorry, I'm not arguing the issue;
11 have produced.
21 week.
6 are called to the stand who are then asked questions. Will
18 Your Honor.
6 Mr. Kirpalani?
11 committee.
16 here next Monday. And if Your Honor were to rule and grant
10 it comes up.
14 telling you what I'm having some trouble with in terms of the
24 undisputed that Alvarez & Marsal has turned over all work
9 a bankruptcy case may not always be work product, but the focus
11 product.
21 aware and take judicial notice of the fact that there's a lot
8 for Lehman Brothers Inc. and for Lehman Brothers Holdings Inc.
18 given, Alvarez & Marsal was at least doing enough work that
21 work product.
3 need.
11 the record that I will come to learn during the course of the
24 through March 13th 2009 when the district court affirmed the
11 information.
13 briefs that have been submitted and the arguments that have
22 it quickly, I hope.
9 that's a motion that we can remove from the Court's docket and
25 read them all out now; there's several hundred of them. Does
14 fine. We'll need maybe at the end of a court date to just put
20 Ainslie.
11 transcript during --
17 DIRECT EXAMINATION
18 BY MR. GAFFEY:
20 A. Good morning.
21 Q. Mr. Ainslie, if you could keep your voice up and into the
11 at Hilton Head Island; spent almost five years doing that. And
15 businesses.
22 organization.
12 A. Yes.
14 Brothers, sir?
19 that time?
20 A. Yes.
7 A. I do.
10 member over the weekend of September 13th and 14th, just prior
13 14th, the board was called to New York for meetings. We had a
18 that Barclays was no longer a prospect for buying the firm and
23 for buying the firm. Had you been aware of any discussions
25 A. Yes.
10 were also told that they might require a full shareholder vote,
17 through to their CEO, and that he had finally been advised that
24 that that now was a dead issue and was not going to happen.
25 Q. And who was it that had told you it was a dead issue, it
2 A. Well, it was Dick Fuld, and I think Bart McDade was also
6 a bankruptcy petition?
18 don't know that we knew that when he left the meeting, but when
20 the phone and that they wanted to speak to the full board.
23 and they were on a speaker in the middle of our board room, and
4 bankruptcy? And they denied that they were but then said:
5 Your management knows what our opinion on this is, we told them
9 him, I recall, which was will you fund -- are you saying you
12 I'm not saying that. But we basically asked him some questions
20 after, again, a long discussion with Weil Gotshal and our in-
25 Q. Now, after the bankruptcy filing, when was the next time
3 14th, and I think the next meeting was a day and a half, two
5 Q. And what did you learn would be the topic of that meeting
6 on the 16th?
19 A. To my recollection, no.
23 A. The meeting was very early. I think the time called was
4 A. I did.
6 transaction?
10 meeting. I'm sure that Dick Fuld spoke and Bart McDade. And
11 there were other lawyers, and I think a Lazard partner was also
16 Weil Gotshal.
19 said, I was on the phone, so it's hard to know and recall from
21 was there.
24 Q. And who spoke first about the nature and structure of the
25 transaction?
9 wash. And there was some discussion about what was included in
12 were told was not included. And there were discussions about
17 contract claims.
18 Q. Now, you said, sir, the word "wash" was used. Do you
25 So I'm not certain exactly who used it, but it was used in
3 and the directors had a discussion and summed it up, were the
8 structure?
13 between him and Tom Russo in describing -- Tom was our general
14 counsel and someone we had known for a long time. And that was
19 particular figures were used about the value of the assets, the
7 transaction?
12 A. No.
13 Q. Would that have been -- was that consistent with what you
18 A. No.
23 Q. Had there -- had the deal been documented at the point the
25 A. Um --
5 on the transaction.
8 A. No.
11 this Court?
20 Russo and the boards where the deal was summarized, what did
22 Barclays?
6 Q. Did there come a time when you saw the minutes of the --
8 A. Yes.
10 A. I have.
18 A. Yes.
20 drafts of minutes?
21 A. No.
24 of those minutes?
25 A. No.
2 the minutes?
6 A. Yes, I have.
9 of September, 2008?
12 paragraph from the bottom that begins, "Mr. Russo asked for any
14 A. Yes, I do.
18 A. Yes.
23 it?
5 A. Yes.
6 Q. And you'll see that from page 6 and overleaf onto page 7,
14 A. No.
18 purchase agreement?
19 A. No, not only would it not have been normal, it would have
25 yes.
2 the Court?
7 A. No.
12 referring to?
14 Q. And had you worked with Ian Lowitt prior to the September
20 well.
3 A. Yes.
20 in my opinion.
22 meeting as well?
24 Q. And did you hear Mr. Lowitt speak when you participated at
25 that meeting?
5 fund the business going forward, the -- the New York brokerage
8 across the board that there was no way Lehman could survive the
15 given what Commissioner Cox had said Sunday night, that there
20 transaction?
21 A. I did.
4 Barclays.
5 Q. Did the view have anything -- did your view that this was
8 it at the meeting?
9 A. Absolutely.
13 witness.
17 to be questioning further?
19 CROSS-EXAMINATION
20 BY MS. TAGGART:
23 committee.
24 THE COURT: Can I just stop for one second. I'm not
8 additional questioning.
20 And I want to ask you a question about the first two sentences.
23 Bankruptcy Code are to obtain the highest and best price and a
14 when you voted to approve the sale transaction, that the price,
20 THE COURT: All right, Mr. Boies, now it's your turn.
22 CROSS-EXAMINATION
23 BY MR. BOIES:
2 A. I do.
5 A. No.
7 A. No.
8 Q. You testified that you were told prior to the Sunday board
11 A. Yes.
15 Q. Approximately.
19 guess that the date was somewhere in the early September range,
20 those meetings.
21 Q. Okay, now, you testified that there came a time when you
22 were told that that deal was not going forward, correct?
23 A. I did, yes.
2 A. Yes.
6 correct?
7 A. Yes, it was.
8 Q. When were you first apprised of the fact that there might
11 communication that set up the meeting for the 16th, that that
13 back to my home that day; I do not recall exactly how I got the
18 Q. That is, you recall being told about it during the board
19 meeting, and you don't recall one way or the other if you knew
20 about it before?
21 A. That's correct.
23 people who were there. Were any of the people who described
11 meeting?
2 A. I think he --
8 at --
12 correct?
13 A. That's my recollection.
14 Q. Now, did Mr. McDade say that the transaction was going to
22 Q. Well, let me ask you to look at the book that counsel gave
25 A. Yes.
2 attention to, the one that begins, "Mr. Russo asked for any
3 questions or comments" --
4 A. I do.
9 A. I do.
10 Q. And is that what Mr. Russo said, that these assets and
16 correct sir?
17 A. Subsequently, yes.
18 Q. By the way, when did you first see a copy of the minutes
25 A. I don't know.
6 Q. Approximately.
8 Q. Within --
10 Marsal, and I can't recall the exact dates we're talking about.
16 October 16th?
19 would have been, you know, within the next month. So maybe the
21 Q. Um-hum.
23 numbers.
24 Q. Now, at any of the meetings that took place over the month
5 month afterwards, you still had not seen a copy of the minutes?
19 accurate description.
22 A. Thank you.
8 these exhibits?
15 473, 765, 766, 770, 771, 773, and 789, as of this date.)
19 draft of the paragraph we've just been talking about, the one
21 A. I see that.
23 there, and you again see the same language that I directed your
2 A. I do.
6 that, sir?
7 A. I do.
11 liabilities.
13 the meeting that you attended, that you've testified about, you
24 and cure amounts equal six billion because that would be what
9 meeting.
16 happened in this meeting found its way into these draft minutes
17 prepared by LBHI?
19 together, no.
24 A. Yes.
4 A. I do.
6 that portion has not been edited, correct? That's the same as
8 A. I believe so.
9 Q. I'm sorry?
12 765. And I'd ask you to turn to page 4. And again, although
23 Q. And you see in this draft as well, you have the reference
9 Q. Okay. And that's the same language that we've seen in all
11 A. Yes.
14 A. I do.
18 A. Yes.
21 correct, sir?
23 cover e-mail.
25 correct sir?
3 meeting, correct?
4 A. Yes.
8 sent around.
10 right-hand corner?
14 A. Yes, he is.
16 correct?
17 A. Yes.
19 page, do you see, again, the same language that we've been
3 A. Yes.
5 here?
6 A. I don't know.
7 Q. Were they accounts at places like OCC and DTC, is that the
10 "accounts".
12 derivative accounts that had margins; you know that from your
15 activity, yes.
2 A. Yes.
9 those employees.
12 A. Yes.
14 whether Barclays thought that the net of all that, getting the
18 A. Yes.
3 A. Right.
6 correct?
7 A. Yes.
18 of mind.
20 Sustained.
6 certainly say that he either had one or he didn't have one, and
9 issue.
14 A. No.
2 A. I do.
7 earlier.
10 A. I do.
17 A. Yes, sir.
21 A. Yes.
24 agreement.
3 necessary or appropriate?
8 A. Right.
13 recall.
15 A. Yes, we did.
18 correct?
24 correct?
25 A. Correct.
11 board.
13 A. No.
14 Q. When did you first find out that there'd been these
15 changes?
17 board that there were issues with the transaction that were
24 appropriate level.
2 Q. -- but can you tell me as best you can, sitting here under
3 oath, when that first conversation occurred when you were told
7 date.
10 early '09.
11 Q. And until -- and when you say late '08, are you talking
14 Q. Now, when you were told that there had been these changes
16 you surprised?
17 A. Yes.
20 were not a lot of questions asked, and I did not ask questions.
21 Q. Okay, so you didn't ask at that time, why there had been
24 A. That's correct.
25 Q. Did there ever come a time when anybody told you or you
3 September 16th?
4 A. We were, as I said --
12 or no questions.
14 noting that it's getting deeply into our lunch hour, I'm
18 time to break.
20 the first time that we're breaking with a witness who is in the
22 that the "rule" applies, namely that counsel for the movants,
2 can talk about the rain that's outside, assuming it's still
3 raining, or his personal needs, whatever they may be. But he's
11 hearings.
16 witness.
10 RESUMED CROSS-EXAMINATION
11 BY MR. BOIES:
15 Did there ever come a time when you asked why there had
16 been the changes to the basic structure of the APA that you had
18 A. No.
19 Q. Did there ever come a time when anybody told you why there
20 had been basic changes to the structure of the APA that you had
25 Q. And that would have been late 2008, early 2009, is that
2 A. Yes.
3 Q. And as you sit here now, you can't place it any more
5 A. That's correct.
10 counsel gave you. And look on page 7. You'll recall that the
17 that language?
18 A. I do.
24 Q. I'm saying that exactly, sir. But more at the point, I'm
3 elsewhere.
7 A. Right.
10 A. I do see that.
16 A. Yes.
17 Q. Thank you. Now, you've seen how the minutes used the term
19 used the word "equal". Now, am I correct that as you sit here
20 now, you don't recall whether at the board meeting the term was
22 correct?
24 description.
2 through 24.
4 Q. And at the very top, just for context, at line 4, you say
5 in your deposition what you've said here: "We were told the
7 A. I do.
14 A. I do see that.
17 A. It was.
19 A. Yes.
25 valued?
3 frame.
10 you were responsible for making sure that Lehman's marks were
12 A. No.
16 overrule that.
2 you, you didn't think you had any responsibility for checking
12 continuous checking.
23 you saying that there was press coverage that suggested there
5 basis and challenged both the process and the accuracy and
9 when you were aware from published reports that people were
13 committee and try to find out whether those concerns were valid
21 A. Yes.
23 press reports, you asked Ernst & Young to check out whether
25 testifying to?
3 A. Yes.
4 Q. And did Ernst & Young come back and report to you, as a
6 A. Yes.
9 marks.
11 significant?
18 sessions with Ernst & Young and internal audits where those
23 A. No.
2 A. No.
4 right?
13 Q. And did Lehman have illiquid assets that did not have a
14 ready market?
15 A. Absolutely.
17 A. It had some.
18 Q. What?
19 A. It had some.
21 it?
23 Q. Well --
24 A. I'll just say that we had some and they were all reported.
3 Q. Approximately.
5 you, exactly.
11 A. Maybe.
16 the amount, that had not been remarked for quite a while, would
19 included.
20 Q. Did you understand that some of the assets that were being
24 Q. And you did not discuss when those assets had been or
2 Q. And indeed, the only time you had any discussions about
5 Q. Yes.
6 A. Yes.
10 Q. And the deal structure that you approved, the only time
11 you talked about that deal structure was at that September 16th
13 A. Yes.
20 implemented by management.
2 Q. And he advised you that you should obtain "the highest and
4 see that?
5 A. I do.
6 Q. And as you understood it, when you say you were told that
9 value?
12 responsibility.
16 basis?
17 A. No.
20 A. I am, yes.
23 liquidation value?
7 transaction?
8 A. No.
11 be such disagreements?
12 A. It's, you know, again, we set out the rules for management
17 were?
21 that you would not have had any discussion about how any
23 A. You're correct.
6 Q. Now, you were aware that the week of September 15th was a
7 week of chaos and turmoil, both for Lehman and for the
10 Q. And you were aware that the value of Lehman's assets was
13 changing.
14 Q. And while there may have been some assets that went up, in
16 deteriorating, correct?
17 A. You know, there were less liquid assets and there were
18 more liquid assets, and the more liquid assets held their value
19 better.
22 15th, correct?
25 deteriorating, correct?
4 liabilities?
11 transaction?
17 that you were giving management guidance, one way or the other,
22 warranties, no.
25 Q. Now, if you had been doing this deal, you would have had a
3 Honor.
13 page 86, line 24, and the top of page 87. And I'm asking
14 you -- or, I'm not asking. Actually, Mr. Thomas is asking you,
15 but we're asking you at the bottom of page 86 whether you would
18 doing this deal, I would have had a true-up clause where you
19 figure out what the actual assets are, and the actual
22 see that?
7 Q. The next section says: "Did you ever think that was part
8 of this agreement?
14 thought it or not."
18 A. Right.
23 A. Right.
25 doing this deal, I would have had a true-up clause where you
4 see that?
5 A. I do.
11 structurers.
14 clause?
17 included. And there are other ways that it could've been done,
24 Q. I'm sorry?
4 A. I said yes.
9 Q. Let me show you page 88, the very next page. Lines 12
14 "Q. Can you think of any say to accomplish it without the use
16 "A. No, I can't. I don't know the assets; I don't know the
20 Q. Was that truthful and accurate at the time you gave it?
21 A. Yes.
23 A. Yes.
2 A. In my opinion, yes.
4 you sit here now, based on everything you know, is there any
7 A. No.
10 REDIRECT EXAMINATION
11 BY MR. GAFFEY:
15 marks?
17 recollection.
2 A. Tab 8.
3 Q. Okay.
4 A. Yes.
6 you another e-mail in that chain. And I'm putting before you
9 this is in --
15 A. Yes.
19 numbers"?
22 testimony --
25 because I'm perfectly happy to have them open the door, but
16 Honor.
7 BY MR. GAFFEY:
11 minutes?
19 (Witness excused)
22 McDade.
7 DIRECT EXAMINATION
8 BY MR. GAFFEY:
10 A. Good afternoon.
13 before?
14 A. Yes, we have.
20 employment?
24 Capital?
7 but what was the -- was there a particular purpose for your
15 Q. What was the nature -- not the number, sir, but the nature
18 at Lehman Brothers.
24 were you there, and maybe just the last two or three positions
4 the fixed income division. Also ran the equities division for
5 three years from 2005 to 2008. And I was the president and
7 bankruptcy.
11 A. Yes, I did.
12 Q. Okay, and about when did they begin, sir? When did you
15 Q. Well, like --
24 two. The first was Bank of America. The firm was engaged very
15 regulatory cooperation.
2 Q. Okay, now, from the time that you first reached out to Mr.
3 Diamond through the conclusion of the deal, did you have some
5 of the transaction?
6 A. Yes, I did.
9 employment?
13 sir.
19 and made sure that Bob and his counsel knew that I was to be
25 evening of the 14th, just for a timeline over the next couple
2 were through, say, Tuesday morning the 16th and what your
18 on both sides?
20 would have been Mark Schaffer, Skip McGee, myself. The senior
22 would have been Rich Ricci, and would've been Michael Klein.
8 Q. No, I don't.
9 A. Okay.
20 the participants?
22 firm, and so data with respect to the balance sheet, data with
9 Diamond. And in that first call with mar. Diamond, was any
11 A. Not at all.
18 A. That's correct.
25 around down on the 16th. How many people are there, how many
2 A. All the rooms are being used. There's well over a hundred
3 individuals, all the advisor teams, all the lawyer teams, very
5 streams.
10 compensation.
12 assets?
15 and the individuals who were responsible for risk managing head
23 Q. Yeah.
25 assets given that this was September 15th and 16th, and the
15 the assets contain any delta between the book value at which
16 Lehman carried those assets and the price that Barclays would
17 pay?
7 delta?
9 THE COURT: All right, maybe you can ask a few more
12 difference between the dollar value that had been agreed and
13 Lehman's marks?
19 A. Yes.
20 Q. And you see that that's an e-mail from Martin Kelly. Did
21 you see this e-mail at or around it's dated, that is, the 16th
22 of September?
24 Q. Yeah.
4 A. Right.
7 Q. Okay.
10 had where you learned the delta between what Lehman's book
13 It was --
15 grounds.
21 hearsay objection.
6 had been done by the work streams and created a summary of that
7 work.
10 between what was shown on Lehman's books and the price that had
11 been agreed?
17 A. What number?
21 Q. And did Mr. Kelly tell you anything else about the
23 the book value and the agreed price? Did he talk to you about
24 accruals?
4 September, right?
5 A. Yes, I did.
7 did you work on the knowledge that Mr. Kelly had given you --
10 price?
15 very clear, given the markets, given the dynamic nature of the
22 September 16th?
3 A. Right.
7 on the 16th.
11 Kelly.
19 A. Mr. Kelly.
22 A. Yes, I do.
3 understanding?
4 A. Not in distress.
13 say anything along the lines of they were going to resell the
15 A. No.
16 Q. Had you, on the 16th, spoken to anyone who had told you
17 that Lehman had been unable to mark its books on the 16th?
21 Q. And at the time, had you spoken to anyone who told you
23 September?
18 Q. Okay, and let me ask you the same question with respect to
20 negotiations?
24 A. Yes, he would.
3 agreement --
8 cure?
25 compensation, sir.
9 Q. And at the time, around the 15th or the 16th -- I'm still
18 Q. And did there come a time during the course of the week
25 potential to pay.
5 A. Correct.
9 liability?
10 A. Yes.
13 numbers up?
15 Q. Did you ever have a discussion with him along those lines?
19 A. Absolutely.
9 Movant's Exhibit 2?
10 A. Yes, I am.
12 A. Yes, I have.
13 Q. What were the circumstances under which you first saw the
14 document?
18 coming together.
19 Q. And when you first saw the document, were you with other
20 people?
23 hand corner?
24 A. Yes, I do.
2 Q. Okay, and above that is the date, September 16th, '08 and
3 the word "final". Were you there when Mr. Birkenfeld put his
10 A. This was, again, the guidance document used for the first
12 Q. And when you say the guidance document used for the first
15 A. Yes.
20 Q. Okay, and the asset side numbers that total -- well, the
21 asset side numbers, are they the agreed numbers or are they
24 Q. And the asset side numbers on this schedule, sir, did they
25 have that same delta between the agreed number and the Lehman
4 we talked about?
6 yes.
8 A. Right.
11 methods?
13 Q. And who would you ask if you wanted to know the answer to
14 that?
15 A. Martin Kelly.
21 Q. Yes.
22 A. Okay.
23 UNIDENTIFIED SPEAKER: 2.
2 A. Yes.
8 times.
10 A. Yes, it was.
12 see at the lower right-hand corner, items for cure, payment and
14 A. Yes, I do.
17 said comp?
18 A. For cure.
20 A. Yes, it is.
23 Q. And is the 2.25 shown on that schedule the same 2.25 you
25 A. Yes, it is.
18 A. No.
19 Q. And were you taking any steps during the week, sir, to
21 A. Yes, I was.
25 Barclays.
11 A. Yes.
15 right?
19 to pay?
20 A. Yes.
22 from 2.25 down to 1.5, and you thought that was the number at
24 A. Yes, I do.
25 Q. And do you know why the number dropped from 2.25 to 1.5?
3 that would be one of the reasons. But no, I don't have the
4 specifics.
5 Q. Did there come a point during the week when Martin Kelly
6 told you that the trade payables were moving from a higher to a
7 lower number?
8 A. Yes.
10 A. Yes.
12 that happened?
4 A. Yes.
5 Q. Is there any reason you could think of, sir, that would
6 justify increasing the amount of the estimate for cure over the
11 how many there were out there and coming up with a number, is
15 correct?
16 A. Yes. Yes.
25 A. Yes.
4 Lehman's books?
5 A. No, I cannot.
8 A. That's correct.
9 Q. Did you ever, in the course of that week, see any of Mr.
11 number?
17 Q. Did Mr. Kelly ever talk to you about the process by which
22 A. Yes.
4 A. Yes.
11 other lawyers?
12 A. Yes.
14 A. Yes.
16 A. Yes.
18 A. Yes.
21 that schedule?
25 A. No.
8 Q. Yeah.
9 A. No.
11 discussions with the lawyers about the comp numbers along those
12 lines?
14 specifically did not, but they would have been part of lots of
18 A. No.
20 It's Exhibit M-1, which is also Exhibit BCI-1. And for good
24 completed?
25 A. Yes.
3 A. Yes.
5 A. Steve Birkenfeld.
11 A. Yes.
14 the terms that had been agreed between Lehman and Barclays?
15 A. Yes.
19 document.
24 A. Yes, I do.
2 A. Right.
7 (Pause)
8 A. Okay.
14 correct?
15 A. Yes.
20 A. Yes, I do.
2 A. Do I have that?
4 A. Yes.
5 Q. And turn to page 71. I think you've got the full text
7 A. Yes.
9 recall that I asked you this question and you gave this answer,
10 sir?
11 A. I do.
13 "Q. Within 9.1(c), you'll see -- let me read you the section
22 16, 2008.'?
23 "A. Right."
25 A. Yes, I do.
3 A. Yes.
5 line 10:
10 A. Yes, I do.
13 next --
7 you know one way or the other whether the two billion number in
12 BY MR. GAFFEY:
16 Q. It's the sa --
19 A. Yes.
3 to make a big deal about it, but we do have a cell phone policy
5 know who you are, whose phone went off, and it was embarrassing
8 you walk into the courtroom, if you have a cell phone with you,
9 you shut it off. Clear? This is a policy that we are only now
19 BY MR. GAFFEY:
22 A. Okay.
4 A. Yes, I have.
11 that?
12 A. Yes, I do.
18 you give any thought to whether the Long Position was properly
21 Q. Do you know who was the proponent of the phrase, who put
23 A. No, I do not.
24 Q. Did you have any discussion with Mr. Lowitt about the
2 Q. Did you have any discussion with Mr. Kelly about it?
4 Q. Did you have any discussion with Mr. Birkenfeld about that
16 about Mr. Kelly, Mr. Lowitt, Mr. Birkenfeld. Did you have
20 A. Correct.
24 A. That's correct.
25 Q. And that was the market value that the Lehman and the
2 A. Yes.
3 Q. Now, on the 16th, when this agreement was signed, did you
6 liabilities, a wash?
8 approximately.
9 Q. And did you understand that the deal was being made
16 A. No.
18 connection with the transaction, had you ever been told it was
20 Barclays?
2 one?
6 A. No.
10 A. That's correct.
11 Q. Now, in your view, was the -- when you were the senior
12 member of the team, was the value of the assets Lehman was
14 deal?
15 A. Yes, it was.
20 A. Yes.
21 Q. Did you come to court on the 17th, the first time there
22 was an appearance?
25 A. Yes, I was.
5 Q. And as you sat with the lawyers in court on the 17th, was
8 liabilities, a wash?
9 A. No.
12 A. That's correct.
15 time. In between the hearing on the 17th and the sale hearing
17 correct?
18 A. Yes, I did.
20 A. Yes, I did.
23 the 19th, did the deal change within those two mile posts?
24 A. Yes, it did.
25 Q. Okay. And in that time period, between the time you were
4 in the transaction?
6 The Fed had requested rather urgently that Barclays take the
12 Yes.
15 agreement?
16 A. Approximately.
18 A. Forty-five billion.
22 A. Approximately.
24 A. Fifty billion.
2 you attended on the 17th and the beginning of the hearing that
14 Q. You heard at the sale hearing on the 19th, there was some
16 A. That's correct.
17 Q. Apart from the changes in the deal that you heard -- and
19 recall that?
20 A. Yes, I do.
21 Q. And apart from the changes in the deal that you heard
5 issues?
10 A. Friday morning.
13 the repo?
16 senior risk partners involved from Barclays, me, Alex Kirk, Ian
18 Q. And what was it that the Barclays folks said about their
5 the repo?
7 Q. Yes, sir.
8 A. Michael Keegan.
10 you or anybody from Lehman the valuation that was the basis --
15 target.
19 A. Yes, sir.
4 Q. Did they tell you how they -- the methods that they had
22 Barclays conducted?
23 A. I do not.
25 there was a gap -- that may be my word not yours, sir -- but
3 A. That's correct.
11 banker.
13 that --
20 their negotiators?
21 A. Yes, he was.
22 Q. Okay. And as best you recall, what did Mr. Klein say and
23 what did Mr. Ricci say by way of saying we're not going to
3 Q. Now, and when they said they wouldn't close unless more
4 value was added to the deal, they didn't give you a number that
5 had to be reached?
9 close?
11 Q. Did you ever ask that question of anyone else, Mr. Lowitt,
12 Mr. Kelly, Mr. Tonucci, any of the other people we've been
13 talking about?
15 Q. Now, what was the nature of the gap, as you understood it,
18 A. That's correct.
20 to assume, correct?
21 A. Exactly.
25 Tuesday?
5 A. No.
8 described to the Court, that is, where Barclays would get more
14 A. Yes.
17 morning meeting, did you have any more conversations with folks
21 Q. And did you give anyone the task of dealing with this
22 issue?
25 Q. Okay. And did you come to find out whether they had
8 15c3 and unencumbered box assets that were added to the deal?
10 billion.
14 A. That's correct.
18 A. No, I didn't.
20 A. No.
21 Q. Did you know the basic -- did you have an idea, sir, on
22 the Friday before the sale hearing, what the value of the repo
8 worth?
11 Q. Yes.
20 Q. And as far as you know, no one on the Lehman side was told
25 I mean by criteria.
2 which is what all the risk operators had been using all week.
4 market value was used for the collateral in the repo and the
6 A. Yes.
11 segregated claim.
13 just talk about the two aspects, the two repo and the
15 you understood, before you came into court for the sale
17 A. Yes.
18 Q. Yes?
19 A. Yes.
21 A. That's correct.
23 A. Market value.
3 A. That's correct.
5 A. That's correct.
6 Q. And you give Mr. Kirk, who enlists Mr. Lowitt and Mr.
7 Kelly and some others, the task of going to find more for
8 Barclays, right?
9 A. That's correct.
11 A. Yes.
14 A. That's right.
15 Q. And did you travel with your lawyers, or did you meet them
16 here?
23 correct?
24 A. Correct.
25 Q. And did you learn the amount that had been added?
3 A. Um-hum.
4 Q. Did you learn about the fact of the 15c3, if not its
5 amount?
7 Q. Okay. And did you learn that any other assets had been
9 A. No.
17 more value? How does Mr. Kirk, Mr. Tonucci, Mr. Kelly and the
21 all the options; and number two (sic), we'd gone through that
5 tough week from tough to finish. But did you have less
6 leverage by the end of the week than you had at the beginning?
7 Did you have less leverage just before the sale hearing began
13 15th into the early morning of the 16th, there was back-and-
21 and Lehman refused, saying no, that ought to be enough for you?
3 A. Sorry, five-one?
11 A. Yes.
12 Q. And you received that e-mail just before you walked into
13 court?
14 A. Correct.
19 Q. Yes.
20 A. No.
21 Q. And did you understand when you received Mr. Kirk's e-mail
23 A. Yes.
3 A. Yes.
12 A. I did.
13 Q. Long day?
14 A. Yes, sir.
20 Q. Yes, sir.
21 A. Not to my recollection.
24 on the 20th, did your view change about the transaction, that
3 Q. And did your view change at any point that the measurement
9 19th at the sale hearing was that the comp obligation -- the
12 A. Yes.
14 dollars?
15 A. Yes.
17 A. Yes.
19 A. Yes.
20 Q. And your view that the deal was still a balanced exchange
24 A. Correct.
9 Q. Let me try and rephrase it. Did you still believe it was
12 A. Yes.
14 A. Yes.
16 that notion?
17 A. No.
22 A. No.
8 A. No.
13 A. Yes, I have.
15 A. A clarifying letter.
17 document?
18 A. Yes.
20 negotiations?
22 a conceptual level.
24 deal?
2 (Pause)
9 the unencumbered box and the 15c3 that had not been mentioned
11 A. That's correct.
12 Q. Now, I bet I know the answer to this, but did you have
14 letter?
25 A. Yes.
2 ii --
3 A. Right.
7 A. Yes.
9 agreement?
10 A. Yes.
14 transaction, correct?
15 A. Yes.
17 provision?
18 A. No.
20 me ask you first, did it ever come to your attention, sir, that
24 Q. Did it ever come to your attention that the repo had been
25 terminated?
2 Q. Did there come a point when you did learn that the repo
4 A. Yes.
11 A. Months.
16 terminated, no.
19 And as I've asked you before, sir, just take a look through it
24 A. Yes, I have.
2 of September 2008?
4 Q. Apart from noting that it had been included, did you have
5 any discussions with anyone from Barclays about the need for
6 that paragraph?
11 Q. Was there any discussion with anyone about the need for
12 that paragraph?
13 A. No.
15 through. Now, the sale hearing has been held. You understood
17 transaction, correct?
18 A. That's correct.
19 Q. And then through the weekend that followed, the 20th and
21 Yes?
22 A. Yes.
25 Q. Okay. Were you in touch with Mr. Kelly over that weekend
3 Sunday.
4 Q. Okay.
8 otherwise?
10 him.
12 A. Yes, I was.
18 A. Yes, I was.
19 Q. And at any point, did Mr. Lowitt or Mr. Kelly inform you
23 A. No.
2 A. Yes, I have.
4 deposition?
5 A. Yes, I did.
6 Q. And that was -- it seems like so long ago, sir, but it was
7 September 2, 2009?
8 A. Yes.
10 balance sheet?
13 the closing, did you see any opening day balance sheets that
16 A. I have no recollection.
18 in evidence, which is also BCI Exhibit 269, for the record, and
19 ask you first to look at the names across the top, to whom the
21 A. No, I do not.
23 see that the total assets shown are 52.88 billion dollars. Do
25 A. Yes, I do.
3 sale transaction?
5 Q. Okay.
8 across the line to show a two billion dollar item. Do you see
9 that?
10 A. Yes, I do.
11 Q. And you see a line for cure payments that goes across the
13 A. Yes, I do.
16 financial schedule?
21 A. Yes, I do.
4 A. That's correct.
12 for Barclays?
15 to the balance sheet itself, do you see the item for cure
18 Q. Yes, sir.
19 A. Yes.
24 attention that the number for cure was just a placeholder for
2 I described before.
5 A. Potential to undertake.
9 A. No, I do not.
10 Q. At any point during the week, from the time that you were
12 had you had any concept or had anybody ever said anything to
13 you that that two billion dollars was anything other than a
2 A. Okay.
7 gains on acquisition."
9 4.2 billion dollars on that day. Was a 4.2 billion dollar gain
13 A. No.
18 A. No.
22 A. No.
25 deposition.
2 A. Correct.
8 A. Okay.
11 McDade. When you had reached your conclusion that the deal was
15 A. That's correct.
18 A. That's correct.
22 A. Yes.
25 correct?
3 CROSS-EXAMINATION
4 BY MS. TAGGART:
11 agreement.
15 that's where Mr. Gaffey took you through some -- one of the
20 see that?
21 A. Yes, I do.
22 Q. But there were other assets that went over into the deal
24 agreement, right? And I'll help. If you look right after that
3 A. Yes, I do.
10 A. That's correct.
14 these are the numbers that the deal was based on, as of the
16 A. That's correct.
17 Q. And in this deal, are also the value of the fifty percent
24 A. Yes, I am.
25 Q. And does that show the value that at least was subject to
3 A. That's correct.
6 Positions plus the 2.7 mortgages, and that's how you get that
7 72.65, right?
8 A. That's correct.
11 liabilities?
12 A. Um-hum.
13 Q. Is that right?
14 A. Yes.
19 right?
20 A. Yes.
23 takes over the Fed, right? And they take over the Fed
2 A. Yes.
6 A. Correct.
7 Q. And I think you told Mr. Gaffey, but then there was part
9 course of the week, and that happened the next day, right?
16 A. That's correct.
20 A. That's correct.
22 take care of it, like you were directing traffic, and then you
24 A. That's correct.
25 Q. And Alex Kirk was one of the people that you directed to
2 A. Yes, he was.
3 Q. What was the number that was reported back to you as the
8 Q. Yes.
11 they take over the Fed, Lehman thinks the nominal value is
14 Barclays over the course of the week with the valuing of those
15 assets.
17 A. That's --
18 Q. Well, let me talk about -- what was the time when you told
19 Mr. Gaffey what Lehman thought the repo collateral is worth was
21 is that?
22 A. The original repo done with the fed had a nominal value of
24 Q. Okay. And do you know what time that valuation was? The
2 Sometime Monday.
5 came and said they weren't comfortable with the amount of value
7 A. Yes, I do.
12 A. Right.
13 Q. And going into the sale hearing later that day, you do
14 hear a result from your team about the value of the assets
17 A. That's correct.
21 going into Friday morning, the repo collateral, and there was
23 the original balance sheet which caused the new Barclays' view
25 number was put because Mr. Keegan and his partners were having
2 included from the confusion around J.P. Morgan and the clearing
4 your answer, had to be that the team, who wasn't there, had to
5 determine that the 1.9 and the 15c3 was the difference in the
8 15c3, the unencumbered box, isn't it right that your deal team
12 dollars?
17 A. That's correct.
20 that right?
21 A. That's right.
23 because Mr. Gaffey didn't use it, it wasn't in your binder, but
24 I have a copy.
7 A. Yes, it is.
10 A. Yes, it does.
12 A. Um-hmm.
13 Q. Is that right?
14 A. Yes.
17 specific role.
18 Q. Okay.
20 evidence.
4 that grounds.
17 (E-mail from Alex Kirk dated 11/19/08 was hereby received into
19 BY MS. TAGGART:
2 A. Yes, I do.
3 Q. And Alex Kirk, in fact, is the person that you gave your
5 that right?
6 A. As of Friday morning.
8 A. Yes.
10 the sale hearing that Alex -- well, I'll ask. Was it your
17 I had to be in court the next day. So Alex Kirk was not part
20 that had your proxy to calculate the value of the Fed repo
23 proxy to finish off the process that had already begun and
25 Q. Before the hearing on the 19th when you testified, did you
10 A. No.
13 CROSS-EXAMINATION
14 BY MR. MAGUIRE:
15 Q. Mr. McDade, Phil Maguire for the SIPA trustee. I'd like
22 A. That's correct.
2 A. That's correct.
3 Q. -- is that correct?
4 A. That's correct.
7 regulatory issues?
14 transaction.
17 A. The SEC.
19 the SEC?
20 A. Yes.
4 assets.
6 the c3 account were assets that were held by Lehman for the
8 A. Yes, we did.
15 A. Yes --
16 Q. -- 2008?
17 A. Yes, it is.
19 transaction?
20 A. Yes.
23 Lehman.
25 A. Yes.
2 asset?
3 A. Yes.
5 just gave Ian the download." Can you tell us to whom you
9 regulatory team and the Barclays regulatory team have had two
10 meetings on this today and will have one more tonight once the
12 reps are much more comfortable than this AM, but still
17 Sir, can you please tell us whether that summary that Mr.
20 A. Yes, it is.
24 A. Yes.
25 Q. Can you please tell the Court whether that deal, that --
10 Q. Sir, I'd like to ask you some questions now about Lehman's
14 A. Yes, I did.
16 A. Over the course of late into the week, DTC had become
9 at 250 million.
10 Q. And can you explain to the Court how the DTC's insistence
15 despite the court hearing and approved process where I and the
20 A. The Lehman team was excluded from all the dialogue with
4 Q. And can --
6 Q. And can you tell us physically how that happened, how you
9 Weil.
10 Q. And was it made clear to you that you were not invited
11 into the room where any of the DTC discussions were going on?
12 A. Extremely clear.
19 A. Okay.
3 And if you look, sir, at the "Assets" side, you'll see just
6 A. Yes, I do.
8 A. Yes.
9 Q. And if you look over -- it's not quite in line but just a
12 A. Yes, I do.
17 "Liability" side?
21 A. Yes.
23 A. Yes, it is.
7 A. That's correct.
14 that took place over the course of that week. And so, it ended
17 A. Cash.
20 hearing?
23 taken out of the deal, was there any Lehman cash, cash
10 twenty-five minutes.
12 CROSS-EXAMINATION
13 BY MR. BOIES:
15 A. Good afternoon.
17 represent Barclays.
21 A. Yes, I do.
25 there were parts of the deal that were not reflected here. Do
4 A. Yes.
5 Q. And would you tell me what parts of the deal either are
8 equity.
9 Q. Now, did you ever see a copy of this in the regular course
10 of business?
14 A. No, I do not.
15 Q. If somebody had shown you this at the time, you would have
17 A. That's correct.
20 A. Yes, I do.
22 recall receiving it but you have no doubt you got it, correct?
25 with anything the Court was told while you were present?
6 Q. Liquidation values.
11 Q. Let's talk about the asset classes that Lehman had the
13 asset classes, were some of those asset classes liquid and some
20 transaction.
25 A. Yes.
14 value and fair market value have been approximately the same
18 Q. When you say "closer", can you just explain what you mean
19 by that?
2 correct?
3 (Pause)
19 what I said before. Are you saying that in the unusual times
22 ordinary times?
23 A. Yes.
3 A. That's correct.
9 Q. During the time that you were involved throughout the week
11 did you always act in what you thought was the best interest of
12 Lehman?
13 A. Yes, absolutely.
17 Lehman?
18 A. No, I am not.
22 balanced way?
23 A. Yes, I do.
25 the transaction that Lehman did with Barclays was the best
2 A. Yes.
6 available?
7 A. Yes, I do.
9 break?
16 Honor.
20 books all over the place. Do you want us to give them to your
24 them.
3 this point -- I'll give you an example. 694 which was just
13 plan, Judge.
15 tomorrow morning.
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4 T E S T I M O N Y
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15 E X H I B I T S
20 770,
21 771,
22 773,
23 789
25 11/19/08
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4 I, Clara Rubin, certify that the foregoing transcript is a true
Clara Rubin
DN: cn=Clara Rubin, o, ou,
6 email=digital1@veritext.com,
c=US
7 Date: 2010.04.28 15:40:35 -04'00'
___________________________________
8 Clara Rubin
11
12 Veritext
14 Suite 580
15 Mineola, NY 11501
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17 Date: April 28, 2010
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