New York | Although Lehman Brothers collapsed more than three years ago, its full dissolution depended on settling creditors’ claims worth around $450 billion. On Tuesday, a federal judge paved the way for the now infamous firm to exit Chapter 11 protection. The final phase of the largest and most complex biggest bankruptcy in US history –as the firm defined it– that tipped world economies into chaos, involving 7,000 legal entities in 40 countries and 75 distinct court proceedings, has begun.
The plan, as the Wall Street Journal points out, could pay creditors up to $65 billion and gives those owed money from Lehman’s various subsidiaries larger recoveries than they would have received under its original plan, but it sets limits on how much they can claim.
“Lehman may one have been a too-big-to-fail global financial institution, but it was not too big to resolve in Chapter 11” said U.S. Bankruptcy Judge James Peck at a hearing in New York. He has spent more than three years overseeing the saga.
Once the fourth-largest investment bank in the United States, with businesses and employees around the globe, today Lehman has sold or closed many of its operations. Only a collection of assets is left (holdings in real estate company Archstone, banks, asset manager Neuberger Berman and private equity). Reorganizing the mamooth has costed more than $1.5 billion in lawyers, advisers as well as other expenses.