Lehman Brothers’ derivatives unit has received approval to sell a municipal portfolio linked to derivatives issued by Warren Buffett’s Berkshire Hathaway, Market Watch reports. The unit will sell interests in its 1271 entity, which holds credit-default protection that Lehman acquired from a Berkshire unit on $8 billion in municipal-bond debt.
Lehman will offload securities in 1271 to investors, who will then get payouts when certain credit events cause Berkshire Hathaway’s BH Finance to make a payment. The firm has already prepaid all payments that could become due to BH Finance under the swap agreement. Restructuring firm, Alvarez & Marsal, is managing Lehman’s assets.
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