Judge OKs Key Elements of Plan to Settle Drexel Suits
A federal judge Friday approved a critical component of Drexel Burnham Lambert Inc.'s bankruptcy reorganization plan in an important step toward resolving the nearly 18-month-old case.
U.S. District Judge Milton Pollack dismissed a handful of objections and endorsed a plan to resolve billions of dollars in legal claims against the once-powerful Wall Street firm.
Pollack approved a class action consisting of scores of securities fraud claims against Drexel, including allegations by federal thrift regulators and more than 100 civil lawsuits. Drexel said 161,000 people are involved.
Pollack also approved the structure of a $350-million fund to be managed by the Securities and Exchange Commission to compensate investors defrauded by Drexel in illegal trading admitted in its 1989 guilty plea.
The overall bankruptcy reorganization plan governs how more than 17,000 creditors will be paid and how Drexel will emerge as a small firm to advise ailing companies. Drexel last month unveiled a draft of the reorganization.
Complaints that the overall reorganization is unfair--including one by jailed financier Michael Milken--will be heard as the plan goes through confirmation proceedings expected to last until next spring.