Lehman wins court approval to exit bankruptcy
Lehman Bros. Holdings Corp., now just the odds and ends of the global financial behemoth that collapsed in September 2008, received court approval Tuesday to exit bankruptcy early next year.
Lehman may now wind down its remaining operations, U.S. Bankruptcy Judge James Peck said at a hearing in New York. Once a mammoth investment bank and brokerage, Lehman is now a collection of assets including real estate, private equity and banking investments.
Peck, who has spent more than three years overseeing the bankruptcy, choked up as he looked back on the largest ever bankruptcy, one that accelerated the global financial crisis and eroded confidence in markets worldwide.
“My world changed when the Lehman cases were assigned to me, and so did yours,” Peck told the courtroom.
Lehman proposed to the court Tuesday that its bankruptcy exit occur no earlier than Jan. 31, giving it time to prepare to stand on its own and paving the way for payouts to creditors to start in 2012.
Unsecured creditors will receive about 21 cents to 28 cents on the dollar, depending on the type of security they held. Shareholders, whose stock in the company hit a high of $86.18 in February 2007, according to Reuters Data, will receive nothing.
The company had $639 billion in assets when it went bankrupt. Some of that money was returned to brokerage customers in a separate proceeding. There remains $65 billion to be returned to creditors who have $450 billion in claims, a group that includes debt investors and trading partners from before the bankruptcy, such as Goldman Sachs.
While Lehman winds down, it will continue to manage its holdings in real estate company Archstone, banks, asset manager Neuberger Berman and private equity.
Looking back, Lehman’s lead lawyer, Harvey Miller of Weil Gotshal & Manges, remembered how the meltdown started Sept. 14, 2008.
“I see the chaos, the confusion and the distress on the faces of hundreds of Lehman employees flooding into the enterprise’s headquarters at 745 Seventh Ave. in their attempt to gather their belongings before a potential lockdown of the building,” Miller told the court.
