Drexel Moves Toward a Possible Settlement
DREXEL Burnham Lambert's bankruptcy case edged toward a possible settlement Feb. 18 as the principal parties agreed in principle on how to divide the remains of the junk-bond powerhouse, the New York Times reported Feb. 19. The newspaper said that if the agreement holds it could clear the way for Drexel to reorganize and emerge from bankruptcy.
Drexel, the biggest underwriter of the high-yield, high-risk debt instruments during the 1980s, fed the takeover boom of the past decade, but its business dried up when the junk-bond market collapsed.
In February 1990 the company filed for bankruptcy protection and began dismantling its remaining assets.
The newspaper quoted Federal District Judge Milton Pollack, one of two judges involved in the case, as saying the case could be concluded within two months.
The agreement in principle was reached after intensive negotiations among Drexel's creditors, including its banks, and the central litigants, including the Federal Deposit Insurance Corporation, and the Resolution Trust Corporation.
They agreed to cut back to around $2 billion their claims against the firm, which has been the object of some 13,000 claims whose total Judge Pollack estimates at $20 billion.