A bankruptcy judge in New York has given the go-ahead for Lehman Brothers Holdings Inc. to spend money on a reorganization plan that has entangled several projects with Irvine-based SunCal Cos.
The judge said Lehman can spend money on and move ahead with a plan to rework projects it financed with SunCal, according to a Bloomberg report.
The projects include San Clemente’s Marblehead Coastal and others in California.
The decision appears to be a setback for SunCal, but how much of one is unclear.
SunCal is looking to wrest some of the projects from Lehman in a partnership with New York-based D.E. Shaw & Co. The two are looking to acquire eight prime development sites for about $150 million.
That effort is playing out in separate court proceedings in Santa Ana.
Under SunCal’s plan, Lehman’s claims on all the properties would be subordinated from secured to unsecured, and its liens would be voided.
Lehman’s plan would give SunCal the short end of the stick.
It calls for paying no more than $15 million to cover claims related to the SunCal projects, including from SunCal itself.
Lehman then would bid for the projects using hundreds of millions of dollars it is owed by SunCal in what’s called a “credit bid.”
SunCal is arguing in court in Santa Ana that Lehman no longer owns the loans tied to the projects, which it sold in June to Fenway Capital LLC, part of New York-based private equity firm Hudson Capital Group LLC.
A bankruptcy judge in Santa Ana has agreed with SunCal’s assertion. She is weighing whether Lehman can act on Fenway’s behalf with a hearing on the matter set for next week.
