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WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Harvey R. Miller Lori R. Fife Attorneys for Lehman Brothers Holdings Inc. and Certain of its Affiliates UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------------------------------x In re : : LEHMAN BROTHERS HOLDINGS INC., et al., : : Debtors. : -------------------------------------------------------------------x

Chapter 11 Case No. 08-13555 (JMP) (Jointly Administered)

NOTICE REGARDING INITIAL DISTRIBUTIONS PURSUANT TO THE MODIFIED THIRD AMENDED JOINT CHAPTER 11 PLAN OF LEHMAN BROTHERS HOLDINGS INC. AND ITS AFFILIATED DEBTORS As previously disclosed, Distributions under the Modified Third Amended Joint Chapter 11 Plan of Lehman Brothers Holdings Inc. and Its Affiliated Debtors, dated December 5, 2011 [ECF No. 26039],1 will commence on April 17, 2012. Attached hereto as Exhibit A is a list that indicates the percentage recovery that will be distributed to holders of Allowed Claims against each Debtor in each Class of nonpriority unsecured Claims under the Plan. Attached hereto as Exhibit B is a summary of the aggregate amount of Distributions that will be distributed to holders of Allowed non-priority unsecured Claims. Attached hereto as Exhibit C is a list that indicates the amount and percentage of the Minimum Cash Reserve and the Asset-to-Reserve Ratio that will be maintained by each Debtor that uses Non-Cash Assets in lieu of Available Cash as reserves for Disputed Claims.

Capitalized terms used herein shall have the meanings ascribed to them in the Plan or the Order Authorizing Use of Non-Cash Assets In Lieu of Available Cash As Reserves for Disputed Claims Pursuant to Section 8.4 of the Debtors Confirmed Joint Plan [ECF No. 25641], as applicable.

US_ACTIVE:\43971742\03\58399.0011

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Dated: New York, New York April 11, 2012

/s/ Lori R. Fife Harvey R. Miller Lori R. Fife WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007 Attorneys for Lehman Brothers Holdings Inc. and Certain of its Affiliates

US_ACTIVE:\43971742\03\58399.0011

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Exhibit A

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Percentage of Allowed Claim (1)

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Lehman Brothers Holdings Inc. Class Class Class Class Class Class Class Class Class Class 3 4A 4B 5 6A 6B 7 8 9A 9B Senior Unsecured Claims Senior Affiliate Claims Senior Affiliate Guarantee Claims Senior Third-Party Guarantee Claims Convenience Claims Guarantee Convenience Claims General Unsecured Claims Affiliate Claims Third-Party Guarantee Claims other than those of the RACERS Trusts Third Party Guarantee Claims of the RACERS Trusts Subordinated Class 10A Claims Subordinated Class 10B Claims Subordinated Class 10C Claims Convenience Claims General Unsecured Claims other than those of Designated Entities General Unsecured Claims of Designated Entities Affiliate Claims of LBHI (3) Affiliate Claims of Participating Subsidiary Debtors Affiliate claims other than those of Participating Debtors Convenience Claims General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate Claims of Participating Subsidiary Debtors Affiliate claims other than those of Participating Debtors Convenience Claims General Unsecured Claims other than those of Designated Entities General Unsecured Claims of Designated Entities Affiliate Claims of LBHI (3) Affiliate Claims of Participating Subsidiary Debtors Affiliate claims other than those of Participating Debtors Convenience Claims General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate Claims of Participating Subsidiary Debtors Affiliate claims other than those of Participating Debtors Convenience Claims General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate Claims of Participating Subsidiary Debtors Affiliate claims other than those of Participating Debtors 6.02% 4.62% 4.51% 3.61% 26.00% 17.00% 5.66% 4.25% 3.40% 2.07% N/A (2) N/A (2) N/A (2) 60.00% 16.43% 10.96% 12.97% 10.96% 11.78% 55.00% 45.69% 53.13% N/A 45.69% 32.00% 20.35% 10.36% 20.64% 17.04% 20.02% 34.00% 15.49% 16.84% 13.47% 15.49% 40.00% 25.66% N/A 22.80% 25.66%

Class 10A Class 10B Class 10C Class 3 Class 4A Class 4B Class 5A Class 5B Class 5C Class 3 Class 4 Class 5A Class 5B Class 5C Class 3 Class 4A Class 4B Class 5A Class 5B Class 5C Class 3 Class 4 Class 5A Class 5B Class 5C Class 3 Class 4 Class 5A Class 5B Class 5C

Lehman Commercial Paper Inc.

Lehman Brothers Commodity Services Inc.

Lehman Brothers Special Financing Inc.

Lehman Brothers OTC Derivatives Inc.

Lehman Brothers Commercial Corporation

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Lehman Brothers Derivative Products Inc. Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI Affiliate claims of Affiliates other than those of LBHI 55.57% N/A 55.57%

Lehman Brothers Financial Products Inc. Class 3 Class 4A Class 4B LB 745 LLC Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI 1.36% 1.36% N/A General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI 100.00% 100.00% 100.00%

PAMI Statler Arms LLC Class 3 Class 4A Class 4B CES Aviation LLC Class 3 Class 4A Class 4B CES Aviation V LLC Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI 0.99% 0.99% N/A General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI N/A 7.25% 7.25% General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI N/A N/A N/A

CES Aviation IX LLC Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI 1.75% 1.75% 1.75%

East Dover Limited Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI N/A 7.66% N/A

Lehman Scottish Finance L.P. Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI Affiliate claims of Affiliates other than those of LBHI N/A N/A N/A

Luxembourg Residential Properties Loan Finance S.a.r.l. Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI Affiliate claims of Affiliates other than those of LBHI N/A N/A N/A

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BNC Mortgage LLC Class 3 Class 4A Class 4B LB Rose Ranch LLC Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI Affiliate claims of Affiliates other than those of LBHI N/A N/A N/A General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI 9.09% N/A 9.09%

Structured Asset Securities Corporation Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI (3) Affiliate claims of Affiliates other than those of LBHI 6.50% 6.50% 6.50%

LB 2080 Kalakaua Owners LLC Class 3 Class 4A Class 4B Merit, LLC Class 3 Class 4A Class 4B LB Somerset LLC Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI Affiliate claims N/A N/A N/A General Unsecured Claims Affiliate Claims of LBHI Affiliate claims N/A N/A 1.09% General Unsecured Claims Affiliate Claims of LBHI Affiliate claims of Affiliates other than those of LBHI N/A N/A N/A

LB Preferred Somerset LLC Class 3 Class 4A Class 4B General Unsecured Claims Affiliate Claims of LBHI Affiliate claims N/A N/A N/A

(1) (2) (3)

"N/A" indicates either $0 available cash for Distributions or $0 in Allowed Claims within the specific Class Distributions reallocated in accordance with Section 6.4 of the Plan In accordance with sections 6.5(b) and 6.5 (c) of the Plan, LBHI is participating in Distributions in the amount and to the extent set forth on Page 4 of the Debtor's Claims Schedule

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Exhibit B

Exhibit B
($ millions)

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Summary of First Distribution to Non-Priority General Unsecured Claims

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Cash Available for Distribution Plan Adjustment from Participating Subsidiary Debtor Distributions (5) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 919 (275) (452) (139) (7) (45) -

Claims

Distribution

Debtors (1) Lehman Brothers Holdings Inc. Lehman Commercial Paper Inc. Lehman Brothers Special Financing Inc. Lehman Brothers Commodity Services Inc. Lehman Brothers OTC Derivatives Inc. Lehman Brothers Commercial Corporation Lehman Brothers Derivative Products Inc. Lehman Brothers Financial Products Inc. LB 745 LLC CES Aviation LLC CES Aviation V LLC CES Aviation IX LLC East Dover Limited Lehman Scottish Finance LP BNC Mortgage LLC Structured Asset Securities Corporation Merit LLC
(1) (2) (3)

Unrestricted Cash (2) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 7,212 5,565 9,462 1,890 255 716 395 487 23 3 6 0 17 -

Reserves (3) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ (3,087) (2,125) (703) (33) (9) (109) (1) (3) (0) (1) (0) (0) (0) (0) (3) (0) (0)

Initial Cash Available for Distribution $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 4,125 3,440 8,759 1,857 245 607 394 484 (0) 23 3 5 (0) 0 14 (0) (0)

Cash Available from Distributions from Other Debtors $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 6,361 121 297 70 0 5 0 12 72 4

Net Cash Available for Distribution (4) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 10,486 3,561 9,056 1,927 245 607 394 484 5 23 3 5 12 0 14 72 4

Total Available Cash for Distribution $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 11,405 3,285 8,604 1,788 238 562 394 484 5 23 3 5 12 0 14 72 4

Allowed (6) $ 226,437 $ 25,851 $ 34,753 $ 2,888 $ 666 $ 1,012 $ 175 $ 258 $ 36 $ 18 $ 6 $ 7 $ 3 $ $ 0 $ 471 $ 325

Disputed (7) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 86,244 656 15,484 740 791 1,117 534 217 297 295 295 295 151 295 151 638 11

Total $ 312,681 $ 26,507 $ 50,237 $ 3,627 $ 1,457 $ 2,129 $ 709 $ 475 $ 333 $ 313 $ 301 $ 302 $ 153 $ 295 $ 151 $ 1,109 $ 336

Distribution to Allowed Claims $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 10,208 3,235 6,900 1,395 105 243 97 258 0 1 0 0 0 0 31 4

Cash Reserve for Disputed Claims (8) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 1,198 50 1,704 393 133 318 297 217 4 21 3 5 12 0 14 41 0 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Total 11,405 3,285 8,604 1,788 238 562 394 475 5 23 3 5 12 0 14 72 4

Includes all Debtors making a distribution on the April 17, 2012 Distribution Date. Other Debtors will not be making Distributions to non-priority unsecured creditors on this date. Unrestricted Cash at 3/23/12 Reserves consist of all, or some, of the following: (a) provisions for operating expenses and non-operating expenses; (b) provisions for other commitments (e.g. unfunded loans, etc.); (c) reserves for anticipated investments (e.g. Archstone and certain financial assets to facilitate unwinding positions); and (d) reserves for Secured, Administrative, Priority and Convenience Claims Available for holders of non-priority, general unsecured Claims Plan Adjustments are calculated based on payment of Allowed Claims, not Disputed Claims Reserves In accordance with sections 6.5 (b) and 6.5 (c) of the Plan, LBHI is participating in Distributions in the amount and to the extent set forth on Page 4 of the Debtor's Claims Schedule Estimate of Disputed Claims for reserve purposes only. Certain Claims have been estimated at less than filed amounts as agreed to through a stipulation or settlement agreement. Does not include estimates for unliquidated Claims. Non-Cash assets will be used in lieu of Cash reserves for Disputed Claims against LBHI, LCPI and LBSF in accordance with the Order of the Bankruptcy Court dated 2/22/12 [ECF No. 25641]. See Exhibit C for details. A pro-rata share of Available Cash will be reserved from Distributions for Disputed Claims against each other Debtor in accordance with section 8.4 of the Plan.

(4) (5) (6) (7) (8)

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Exhibit C

Exhibit C

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Minimum Cash Reserve and Asset-to-Reserve Ratios for Initial Distribution

($ millions) Lehman Commercial Paper Inc.

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Description Assets Financial Inventory Receivables & Other Assets (2) Investment in Affiliates (2) Interco. & Affiliate Receivables (3) Racers & Subrogated Claims (4) Total Non-Cash Assets Required Claims Reserve % of Cash Reserves for Disputed Claims Required Claims Reserve Reserve for Disputed Claims (5) Less: Plan Adjustments & Plan Settlement Reserves Reserve Available to All Classes Less: Minimum Cash Reserve Net Asset Requirement Additional Reserves Total Asset-to-Reserve Ratio
(1)

Lehman Brothers Holdings Inc.

Lehman Brothers Special Financing Inc.

3,730 455 1,600 15,800 3,325 24,911

7,860 198 273 1,009 9,341

2,112 323 327 851 3,613

25%

25%

53%

3,532 (341) 3,191 (798)

108 (30) 77 (19)

3,149 (49) 3,100 (1,655)

$ $

2,393 (59) 10.4x

$ $

58 (1) 161.2x

$ $

1,445 2.5x

(1)

(2)

(3) (4) (5)

Calculation based on the 9/30/11 Balance Sheet (unaudited), as reflected in the November, 2011 Monthly Operating Report [Docket No. 23709]. Certain adjustments were made to reflect subsequent activity and to eliminate the value of any assets that may be encumbered. Excludes LBHI assets related to Woodlands and Aurora ($1.6B) (see Disclosure Statement Exhibit 4), and preferred shares of Neuberger Berman Group LLC (which were redeemed for cash subsequent to 9/30/11) Excludes assets recovered prior to the initial distribution (e.g. proceeds from Lehman Brothers Asia Holdings) as well as the intra-Debtor settlement of claims as part of the initial Distribution Adjusts for recoveries on RACERS as part of the intra-Debtor Distribution Includes only the portion of Plan Adjustments and Plan Settlement amounts reserved for Disputed Claims