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Business & Tech

'Zombie Entity' Takes Aim at Novato Nonprofit, Report Says

Creditors representing Lehman Brothers seek $16.8 million from Novato's Buck Institute.

One of the worst actors in the 2008 foreclosure crisis is involved in a dispute that could unleash massive collateral damage on a Novato nonprofit group, Bloomberg reports.

Creditors representing Lehman Brothers, whose accumulation of toxic assets helped trigger a global financial meltdown in 2008, are reportedly seeking $16.8 million (including $4.7 million in interest) from Novato's Buck Institute for Research on Aging.

Lehman's collectors say the company was unfairly compensated by the Novato nonprofit during its Chapter 11 proceedings, Bloomberg reports.

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The Novato company reportedly paid Lehman $2 million to settle a "swap contract," the report said. The Buck Institute is among many nonprofits Lehman's creditors are hounding amid similar circumstances.

The Lehman creditors are seeking more than half of what the Buck Institute spends annually researching Alzheimer's and Parkinson's, among other illnesses, Bloomberg reports.

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And woe to anyone who gets in their way, analysts say.

“Lehman is sort of a zombie-like bankruptcy entity: Instead of looking for brains, it’s looking for cash,” bankruptcy attorney Chip Bowles told Bloomberg.

Asked to assess the potential hurt a $16.8 million payout would inflict on her company, Buck Institute Chief Administrative Officer and General Counsel Mary McEachron said the Lehman creditors' claims are without merit.

“The Lehman matters has no impact on our work going forward,” McEachron said in an email response to Patch.

“As we have disclosed in our audited Financials since 2010, we fully paid Lehman all of the monies owed to them in 2008, when they went into bankruptcy. The fact that they believe they should have received more does not change our obligation.”


But Lehman's creditors shouldn't be underestimated, Bowles said.

“Lehman doesn’t care," he said. "They have a duty to maximize their return to their bankruptcy creditors. If you’re Mother Teresa, they’ll go after you.”



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