When Lehman Bros. failed in 2008 it sent shock-waves through the financial sector and played a major role on the economic crash of that year. Lehman Bros. filed for bankruptcy in September of 2008. Creditors hold more than $160 billion in claims and have agreed on a settlement, paving a way to the end of Lehman’s Chapter 11 bankruptcy.
The bank was Wall Street’s 4th largest investment bank. At the time of its filing Lehman’s had assets worth $685 billion.
Reuters reported that Lehman’s lead bankruptcy attorney, Lori Fife, told an interviewer, “We believe right now that we have enough support to confirm a plan,” she added, “We hope it will be confirmed by the end of the year and we hope to make distributions early next year.”
The plan would return $65 billion to creditors who are owed $320 billion. The liquidation is projected to last for a few years after the payouts begin.
Chapter 11 bankruptcy is often referred to as reorganization and is one of the structures that bankruptcy lawyers recommend for businesses although some individuals qualify. This bankruptcy protection allows the business to continue operations and offers protection from creditors. The business must submit a list of assets and liabilities along with current income and expenses.
This is a brief overview of Chapter 11; a bankruptcy attorney will be able to give more details about the structure and the time it will take to emerge from the reorganization.
