The global credit crunch has claimed perhaps its biggest victim so far in Lehman Brothers Holdings Inc. (LBHI), which announced on Monday that it intends to file a petition under Chapter 11 of the US Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York.
According to the statement issued by the venerable institution, the fourth-largest US investment bank which has had a presence on Wall Street for well over 150 years, the board of directors of LBHI authorized the filing of the Chapter 11 petition in order to "protect its assets and maximize value."
In conjunction with the filing, LBHI intends to file a variety of first day motions that will allow it to continue to manage operations in the ordinary course. Those motions include requests to make wage and salary payments and continue other benefits to its employees.
The statement explained that none of the broker-dealer subsidiaries or other subsidiaries of LBHI will be included in the Chapter 11 filing and all of the broker-dealers will continue to operate. Customers of Lehman Brothers, including customers of its wholly owned subsidiary, Neuberger Berman Holdings, LLC, may continue to trade or take other actions with respect to their accounts, it added.
LBHI is exploring the sale of its broker-dealer operations and, as previously announced, is in advanced discussions with a number of potential purchasers to sell its Investment Management Division (“IMD”). LBHI intends to pursue those discussions as well as "a number of other strategic alternatives," the bank stated.
Neuberger Berman, LLC and Lehman Brothers Asset Management will continue to conduct business as usual and will not be subject to the bankruptcy case of its parent, and its portfolio management, research and operating functions remain intact. In addition, fully paid securities of customers of Neuberger Berman are segregated from the assets of Lehman Brothers and are not subject to the claims of Lehman Brothers Holdings’ creditors.
Lehman Brothers is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world. It is understood that its exposure to the troubled US subprime mortgage market was the major factor behind the bank's deteriorating financial standing.
The announcement has capped off a turbulent couple of days on Wall Street, which saw another investment banking giant, Merrill Lynch, succumb to subprime-related credit crisis. However, while Merrill was rescued in a USD50bn buy-out by the Bank of America, Lehman had no such luck, and the bank was forced into seeking Chapter 11 protection after talks with British Bank Barclays collapsed over the weekend, and the US Treasury ruled out a taxpayer-funded rescue so soon after propping up the mortgage institutions Fannie Mae and Freddie Mac.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment