Lehman Brothers: The Court-ordered ADR Procedures have been Wildly Successful.

Lehman Brothers bankruptcy is the largest in U.S. history. It invested heavily in predatory mortgages just as housing prices started falling.

Lehman Brothers Holdings Inc. v. Smart Mortgage Centers Inc.


United States Bankruptcy Court, S.D. New York

FEB. 1, 2022 | REPUBLISHED BY LINY : FEB. 1, 2022

This is all related to the 2008 collapse of Lehman Bros. The Lehman Brothers bankruptcy is the largest in U.S. history.

It invested heavily in predatory mortgages just as housing prices started falling.

We’re tracking the many cases currently before Judge Chapman, post financial crisis.

The question it continues to raise;

How is Lehman Bros allowed to obtain monetary relief for predatory loans from the same banks and non-banks, et al, who are stealin’ citizens homes with court approval around the country.

We have the answer and the evidence.

It’s called the Greatest Theft of Property from Citizens in American History.


TELEPHONE (212) 382-3300
FACSIMILE (212) 382-0050

February 1, 2022


The Honorable Shelley C. Chapman,
U.S.B.J. United States Bankruptcy Court
for the Southern District of New York
One Bowling Green
New York, New York 10004-1408

Re: Lehman Brothers Holdings Inc. v. Smart Mortgage Centers, Inc., Adv. Pro. No. 21-01066

Dear Judge Chapman:

We represent Lehman Brothers Holdings Inc. (the “Plan Administrator”) and write in response to Smart Mortgage Centers, Inc.’s (“Smart Mortgage”) letter, dated August 31, 2021, requesting that discovery and court ordered mediation be stayed until its pending motion to dismiss (“Motion”) is decided (Adv. Pro. No. 21-01066) [Dkt. No. 16] (the “Stay Letter”). The Plan Administrator respectfully seeks denial of the letter request and an order requiring Smart Mortgage to (i) comply with the ADR Order and (ii) continue with discovery.


On August 12, 2021, the Plan Administrator served Requests for Production of Documents on Smart Mortgage. Under Federal Rules of Civil Procedure 26 and 34, as incorporated by Federal Rules of Bankruptcy Procedure 7026 and 7034, and the Local Rules of this Court, Smart Mortgage had 30 days from service to respond to the Requests, meaning that the deadline to respond was September 11, 2021.

No extension on the deadline to respond was granted or imposed by either the Plaintiff or the Court, respectively.

Instead, Smart Mortgage filed the Stay Letter.

On March 2, 2020, the Plan Administrator served an ADR Notice on Smart Mortgage and on September 10, 2021, the parties had a pre-mediation call with the mediator.

Mediation proceedings have not moved any further.

The Court Should Order Smart Mortgage to Mediate While Its Motion is Pending

This Court should not stay the ADR Order as to Smart Mortgage and should order Smart Mortgage mediate with the Plan Administrator.

The Court-ordered ADR Procedures have been wildly successful.

The Plan Administrator has successfully resolved over 95.5% of the number of active cases representing over 97.4% of the damages sought. Smart Mortgage waives no defenses in participating in the mediation.

Smart Mortgage’s participation in mediation would not violate Smart Mortgage’s right to due process because the mediation is non-binding, and the ADR Order explicitly states that the Seller/Defendant cannot be forced to accept any specific settlement or compromise.

Judicial resources, as well as the resources of the Plan Administrator and most defendants, have been conserved through the good-faith efforts of the Plan Administrator and the vast majority of defendants to come together and settle similar litigations.

Discovery Should Continue

When determining whether to stay discovery during the pendency of a motion to dismiss, courts consider “the breadth of discovery sought, the burden of responding to it, the prejudice that would result to the party opposing the stay, and the strength of the pending motion forming the basis of the request for stay.”

Republic of Turk. v. Christie’s, Inc., 316 F. Supp. 3d 675, 677 (S.D.N.Y. 2018).

Smart Mortgage’s request should be denied because the Stay Letter fails to show these factors favor a stay.

First, Smart Mortgage’s Stay Letter failed to demonstrate the strength of the Motion forming the basis of the request for stay.

The Motion seeks dismissal of the RMBS Complaints, asserting lack of standing and lack of subject matter jurisdiction.

As set forth in the Plan Administrator’s opposition, the Motion should be denied because the Plan Administrator has standing, and this Court has subject matter jurisdiction.

Second, at this stage of discovery, the Plan Administrator only seeks document production.

Based upon the Plan Administrator’s experience, document production which will help educate the parties about their claims and defenses and may cause a quicker resolution.

Indeed, in the coordinated indemnification cases, all but one defendant that filed a similar motion to dismiss resolved their case during document production.

There is little burden on Smart Mortgage to participate in document discovery.

Finally, assuming arguendo, that the Court concluded that it does not have subject matter jurisdiction over Smart Mortgage, the Plan Administrator would simply re-file this lawsuit in another jurisdiction and conduct the same discovery.

Smart Mortgage would not be alleviated of any burden to comply with discovery because the discovery would simply be taken in the later-filed action. Only the Plan Administrator would be burdened by any delay in discovery.

The Plan Administrator respectfully asks the Court to instruct the parties to continue with mediation and discovery. Entertaining Smart Mortgage’s request for a stay would not be a productive use of the Court’s time or the parties’ resources.

Rather, the best use of the parties’ time would be to focus on the hugely successful mediation protocol.

Respectfully submitted,

/s/ Adam M. Bialek
Adam M. Bialek

Cc: Counsel of Record

Adam M. Bialek, Partner

Litigation & Dispute Resolution Group










Adam M. Bialek concentrates his practice in commercial litigation and arbitration with broad experience in large, complex commercial cases. Over the course of his career, Adam has litigated and arbitrated a wide range of disputes, but concentrates in such areas as commercial contracts, securities, insurance and reinsurance matters, derivative financing, employment matters, and products liability. Adam also has extensive experience in all procedural aspects of litigation, including venue challenges, forum selection clauses, declaratory judgment practices, discovery, motion practice, trial, post-trial, and appeals. In recent years, Adam has prepared and served as counsel in eight trials and arbitrations.

Education and Background

Adam received his J.D. from Tulane Law School in 2002. He received his B.A. degree in Economics and Environmental Analysis and Policy from Boston University, graduating cum laude, in 1999.

Select Litigations:

  • Currently representing AIG in litigation seeking to recover over $70 million in losses on certain project finance notes issued by a contractor of Petróleo Brasileiro, Inc. (“Petrobras”). American General Life Insurance Company, et al., v. Schahin Petróleo e Gás S,A,, et al., No. 2017-19016 (Dist. Ct. Harris County, Tex.).

  • Currently representing a large holder of residential mortgage-backed securities (“RMBS”) in over $400 million in claims against U.S. Bank, trustee of the RMBS trusts, for breaching its contractual duties. MRLN LLC v. U.S. Bank National Association, Index No. 652712/2018 (N.Y. Sup. Ct., N.Y. Cnty.)
  • Currently representing Lehman Brothers in litigations asserting indemnification claims against more than 150 mortgage loan sellers relating to Lehman’s multi-billion dollar settlements of claims litigation with (i) Fannie Mae and Freddie Mac, and (ii) trustees for hundreds of RMBS trusts. In re Lehman Brothers Holdings Inc., et al., Case No. 08-13555 (SCC) (Bankr. S.D.N.Y.), Adversary Proceeding No. 16-01019 (SCC).

  • Represented Lehman Brothers Special Financing Inc. against a trust and trustee related to trustee’s improper and ineffective termination of a $25 million interest rate swap agreement.
  • Represented Lehman Brothers Special Financing Inc. against a broad array of major financial institutions and entities, in their capacities as Trustees, Issuers and/or Noteholders, seeking to recover more than $3 billion in assets for Lehman Brothers.

  • Represented Tusk Strategies, Inc. in putative class action regarding purported violations of the New York state law equivalent of the Telephone Consumer Protection Act. Bank v. Uber Technologies, Inc. et al., No. 1:16-cv-5845 (CBA)(VMS)(E.D.N.Y.).
  • Represented Tusk Strategies, Inc. in a defamation case in connection with a proxy fight for Tegna, Inc. Standard General L.P. et al. v. Tusk Strategies, Inc. et al., 652407/2020 (Sup. Ct. 2020).
  • Represented ORIX in disputes in connection with its $90 million commitment in a private equity fund investing in structured life insurance products.
  • Represented Centre Insurance Co. in an action pending in Texas State Court, Houston; after obtaining permission to file mandamus and submitting the mandamus briefing application to the appellate court, the trial court reversed its prior ruling and compelled arbitration in New York.
  • Represented major insurer in a successful three-day arbitration with its managing general underwriter regarding millions of dollars of disputed commissions.
  • Represented numerous top fashion models and agents in employment related disputes.
  • Represented numerous executives in drafting and negotiating employment contracts, severance and release agreements.
  • Represented the board of directors of a public company in a lawsuit alleging mismanagement, diversion of assets and breach of fiduciary duty.
  • Represented a high-tech Swiss manufacturer in a successful four-day trial opposing preliminary injunction in federal court seeking to enjoin the Swiss manufacturer from selling its products in the United States.
  • Represented a family in successful FINRA arbitration claims and subsequent confirmation and appeal affirming a $3.5 million arbitration award against a securities broker.
  • Represented hedge funds in lawsuits by investors alleging fraud and misrepresentation by the funds and the fund manager regarding investments in certain debt securities that declined in value during recent credit crisis, allegedly preventing the investors from redeeming their shares in the funds in a timely manner.
  • Represented nonparty H5, a leading provider of ediscovery, technology-assisted review and case preparation services, in connection with litigation concerning environmental pollution in Ecuador, Chevron Corporation v. Donziger, et al., 11 Civ. 0691 (S.D.N.Y.) (LAK), and multiple related third party subpoenas and applications to conduct discovery of the company, the CEO, and the general counsel pursuant to 28 U.S.C. § 1782.
  • Represented manufacturer of component parts of a crane in multiple litigations by numerous parties alleging product defect in connection with high profile crane collapse in Long Island City, Queens, New York.
  • Represented numerous manufacturers in defense of products liability actions.


“Arbitration v. Litigation: Which To Choose If You Have A Choice?” Webinar for Infocomm International, a non-profit association located in Washington, D.C. with over 3,800 members in the multibillion dollar audiovisual communication industry – March 17, 2010.

“Current Developments in Enforcement of Wage and Labor Hour Laws” Webinar for Infocomm International – February 29, 2012

Professional Affiliations

  • Federal Bar Association
  • UJA Federation of New York, Next Generation Bankruptcy and Reorganization Group

Awards and Recognition

Named as a “Super Lawyer” in Business Litigation in the New York Super Lawyers for 2019-2021.*

Adam was previously recognized as a “Rising Star” in the area of business litigation in the New York Super Lawyer® from 2011 to 2017, a designation limited to 2.5% of the lawyers in New York.

INSOL International is a world-wide federation of national associations for accountants and lawyers who specialise in turnaround and insolvency.


Hon. Judge Shelley C. Chapman, US Bankruptcy Court, Southern District of New York

Shelley C. Chapman was sworn in as a United States Bankruptcy Judge for the Southern District of New York on March 5, 2010. At the time of her appointment, she was a partner in the law firm of Willkie Farr & Gallagher LLP in the Business Reorganization and Restructuring Department, where her practice included the representation of debtors, creditors, and other parties in interest in major chapter 11 cases and out-of-court restructurings. Prior to joining Willkie Farr in 2001, Judge Chapman was a partner at Sidley & Austin. Judge Chapman currently presides over the Lehman Brothers chapter 11 and SIPA proceedings, and has presided over many other chapter 11 mega-cases and chapter 15 cross-border proceedings, including Boston Generating, Innkeepers, Ambac, LightSquared, Sbarro, NII Holdings, Sabine Oil & Gas, Cumulus Media, Toisa, and Nine West
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