Mabey Appointed as Mediator in Lehman Brothers Bankruptcy Cases

Ralph R. Mabey, a Professor of Law at the S.J. Quinney College of Law, has been appointed as a mediator to assist in resolving disputes in the Lehman Brothers Chapter 11 bankruptcy cases in New York City.  Lehman Brothers was the fourth-largest investment bank in the United States and, according to its bankruptcy filing, held consolidated assets totaling $639 billion. It is said to be the largest bankruptcy ever filed.

Mabey’s appointment was made by The Hon. James M. Peck, the U.S. Bankruptcy Judge presiding over the Lehman Brothers cases. Judge Peck instructed that the mediations will take place in New York.

“I am honored by the confidence placed in me by the Court and the parties in the Lehman cases,” Mabey said. I will work hard to assist the parties in reaching economic and mutually agreeable solutions to their important matters.”

Mabey and two other mediators appointed by the Court will focus their efforts on settling disputes surrounding approximately 250 derivatives contracts held in Lehman’s portfolio.  In these contracts, the Court said, “there is reasonable cause…to believe that disagreement exists over the amounts that may be owed to [Lehman].”

Derivatives contracts are financial instruments that are often complex and sophisticated.  They are frequently used to hedge against a wide variety of financial risks, but also may be used for profit speculation. The value of a derivatives contract is based upon an underlying contract or transaction to which it is tied.  According to the Wall Street Journal, Lehman Brothers’ derivatives contracts were tied to interest rates, currencies, commodities and stocks. At the time of bankruptcy, Lehman Brothers had many thousands of outstanding derivatives transactions with a “notional” or theoretical value in the trillions of dollars.

Mabey formerly served as a United States Bankruptcy Judge, and his judicial opinions are often cited by courts and scholars. He has served as the president and chair of the American College of Bankruptcy and as an appointee of the Chief Justice of the United States to the United States Judicial Conference’s Advisory Committee on the Bankruptcy Rules. He is currently a contributing author to Collier on Bankruptcy, a member of the American Law Institute, and a founding member of the International Insolvency Institute.  Professor Mabey has been appointed to serve as mediator, arbitrator, trustee of examiner, in cases in Alaska, Arizona, California, Delaware, Louisiana, Michigan, Texas, Utah, Virginia, Washington and Washington DC, as well as New York.

Mabey is Senior Of Counsel to the Los Angeles law firm of Stutman, Treister & Glatt, P.C. At the S.J. Quinney College of Law, he currently teaches bankruptcy, international bankruptcy, and corporate organizations.