Lehman Brothers files for Chapter 11 protection

(AP) - Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filedfor Chapter 11 bankruptcy protection from its creditors on Mondayand said it was

News 12 Staff

Sep 15, 2008, 11:16 PM

Updated 5,724 days ago

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Lehman Brothers files for Chapter 11 protection
(AP) - Lehman Brothers, a 158-year-old investment bank choked by the credit crisis and falling real estate values, filedfor Chapter 11 bankruptcy protection from its creditors on Mondayand said it was trying to sell off key business units.
The filing was made in the U.S. Bankruptcy Court in the SouthernDisctrict of New York. The case had not yet been assigned to ajudge.
Lehman's last hope of surviving outside of court protectionfaded Sunday after British bank Barclays PLC withdrew its bid tobuy the investment bank.
Lehman learned at a last-minute meeting on Friday with federalofficials that it would not be getting any emergency funding togive it the liquidity it needed, Chief Financial Officer Ian Lowittsaid in an affidavit.
Lehman fell under the weight of $60 billion in soured realestate holdings and tighter a credit market that forced it to seekcourt protection.
The filing had been so hastily made that the company had not yetfiled motions by Monday morning that are typically made on thefirst day, such as asking the court for permission to continuepaying employees.
Filing for Chapter 11 protection allows a company to restructurewhile creditor claims are held at bay. The company most likelychose to file under Chapter 11, rather than a Chapter 7liquidation, so that it could retain more control over the sellingoff of assets, said Stephen Lubben, the Daniel J. Moore professorof law at Seton Hall Law School. In a Chapter 7 filing, the courtwould immediately appoint a trustee to take over the case.
"I'm sure they think they could conduct a better liquidationthemselves, and that's probably true," Lubben said.
The investment bank had said earlier that none of itsbroker-dealer subsidiaries or other units would be included in theChapter 11 filing. It says it is exploring the sale of itsbroker-dealer operations and is in "advanced discussions" to sellits investment management unit.
In its bankruptcy petition, Lehman listed Citigroup among itsbiggest unsecured creditors, with about $138 billion in bonds as ofJuly 2. The Bank of New York Mellon Corp. was listed as holdingabout $17 billion in debt.
Lehman said that as of May 31, it had assets of $639 billion anddebt of $613 billion.


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