Lehman Brothers Emerges From Bankruptcy With $1.6 Billion Advisory Bill
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Former US financial giants Lehman Brothers has finally exited from bankruptcy protection after its stunning collapse during the peak of the 2008 financial crisis, and will begin paying off its creditors starting from 17th April this year.
On Tuesday, the liquidators running Lehman Brothers Holdings announced that the company had finally been able to exit from its Chapter 11 bankruptcy filing in 2008; and was now headed towards a “complete liquidation” of its remaining assets, valued at $65 billion, in order to pay back its creditors.
Former US financial giants Lehman Brothers has finally exited from bankruptcy protection after its stunning collapse during the peak of the 2008 financial crisis, and will begin paying off its creditors starting from 17th April this year.
On Tuesday, the liquidators running Lehman Brothers Holdings announced that the company had finally been able to exit from its Chapter 11 bankruptcy filing in 2008; and was now headed towards a “complete liquidation” of its remaining assets, valued at $65 billion, in order to pay back its creditors.
Although the investment bank did originally owe close to $450 billion to its creditors, a settlement agreement reached late last year managed to whittle the sum down to $65 billion – with $30 billion of the sum expected to come from Lehman’s remaining cash assets, while the remaining $35 billion are in illiquid assets to be monetised for distribution.
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“We are proud to announce Lehman’s exit from Chapter 11 and entrance into the final stage of this process — distributions to creditors,” said John Suckow, Lehman’s president and chief operating officer in a press statement cited by AFP.
[quote]”Our objective remains to provide the best results possible for creditors – by continuing to strategically position assets to produce strong values, to pursue the resolution of disputed claims and other matters in litigation, and to manage expenses in line with the asset disposition process,” he said.[/quote]According to the company, creditors will obtain a payout worth $10 billion on the 17th of April this year, before receiving regular bi-annual payments over the next five years to make up the shortfall. In the US, priority payments will be expected for creditors such as government tax services as well as for government-seized mortgage finance lenders Fannie Mae and Freddie Mac. Other creditors such as JPMorgan Chase – Lehman’s single largest creditor – and Citigroup are also chasing for repayments to be made as quickly as possible.
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The Lehman Brothers bankruptcy “is the largest and most complex in history,” said officials who are overseeing the filing. 7,000 legal entities in over 40 countries are involved, with the company having to pay out nearly $1.6 billion thus far in legal and consultancy bills.
Most officials believe that the advisory payments alone could eventually reach up to $5 billion when all the creditor payments are made.
Eventually, Lehman will still face years of court cases over the next few years, despite having daily bankruptcy supervision now behind them, with more 26,000 lawsuits already in the courts’ dockets.
