fisher capital management investing:Lehman, Tribune, Fisher Island, Quigley, AAI: Bankruptcy

This report contains items about companies both in bankruptcy and not in bankruptcy. Adds Fisher Island and Quigley in Updates, Aryx in Filing Possible and Shearer’s in Downgrade.)

March 23 (Bloomberg) -- The business of trading claims against bankrupt companies will virtually vanish if Lehman Brothers Holdings Inc. confirms a Chapter 11 plan this year.

Lehman and its brokerage unit were responsible for almost $38.7 billion in traded claims during the past year, according to data compiled from court records by SecondMarket Inc. The companies in second and third places each had traded claims amounting to 2 percent of Lehman’s total.

Those companies, old General Motors Corp. and Mesa Air Group Inc., had claim trades of less than $800 million apiece in the period, according to New York-based SecondMarket, which describes itself as the largest secondary market for illiquid assets.

In the past few months, the trend has been toward larger dollar amounts and fewer trades, not surprising given the declining numbers of major Chapter 11 filings.

In February, $3.47 billion of claims changed hands in 524 transfers, compared with $2.55 billion in face amount on 636 trades in January. Lehman’s $2.72 billion in deals accounted for 78 percent of February’s total. Mesa followed with $551 million in face amount.

The number of reported trades in February was the fewest since June 2009, SecondMarket said. The 45 companies with traded claims were the fewest in two years.

Updates

Aurelius May File LBO Suits to Beat Statute of Limitations

Aurelius Capital Management LP plugged what it saw as a loophole in the ability to file lawsuits if the bankruptcy judge doesn’t sign a confirmation order approving the reorganization plan proposed by Tribune Co. by June.

Aurelius, one of the proponents of a competing plan, contends it automatically had the right this year to file lawsuits against shareholders who sold their stock in the 2007 leveraged buyout. Tribune lost the right to recover $8.2 billion in stock-redemption payments by failing to file suits in December as the two-year window for the bankrupt company closed, Aurelius said.

Aurelius took the position that Tribune’s failure to sue abandoned the claims, allowing creditors to sue in their own right.

At a hearing yesterday, the bankruptcy judge said he would allow the creditors to file suit to ensure their claims aren’t lost when the four-year statute of limitations runs out in June. The lawsuits still can’t go ahead until completion of the confirmation trial over Tribune’s plan, the judge said.