Lehman reimbursement funds would boost ailing budgets

AP file photoSan Mateo County officials hope Lehman Bros. might begin making reparations to the county soon.

After learning that a federal judge approved a bankruptcy plan for Lehman Bros., San Mateo County Treasurer Sandie Arnott was hopeful Wednesday the bank might begin repaying the county as soon as next quarter.

The county lost $155 million — more than any local government nationwide — in the 2008 collapse of what was then one of the world’s largest investment banks.

“I’ve got my fingers crossed,” Arnott said. “Money’s tight right now, so being able to have those funds loosened up and given back to people, the sooner the better.”

Bloomberg News reported that Lehman has $23 billion in cash available to distribute starting next year. It will liquidate its other assets over three years to raise another $65 billion. Bankruptcy managers expect $370 billion in claims.

The final deal will give most creditors about 18 cents on the dollar, with certain bondholders recovering 21.1 cents, Bloomberg reported.

“That’s really good news,” said Robert Gaskill, superintendent of the Cabrillo Unified School District, which lost nearly $1.4 million from a county-managed investment pool. “Our hits were substantial for a district of our size.”

Gaskill hopes his district can recoup up to $300,000, a significant sum in what he expects will be a tight budget year.

“It could be the equivalent of about four or five teachers,” he said.

County agencies are still involved in lawsuits over the bank’s collapse.

Cabrillo is one of a dozen school districts suing the county and former county Treasurer Lee Buffington, who invested pooled funds from local agencies in Lehman.

Meanwhile, the county is suing former Lehman CEO Richard Fuld and other former executives. That lawsuit is still in its early stages, said county lawyer Lee Thompson.

“It would be nice if I didn’t have to hear the word Lehman anymore,” Arnott said.

acrawford@sfexaminer.com

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