After 14 years, Lehman Brothers brokerage firm ends liquidation

0

NEW YORK, Sept 28 (Reuters) – The liquidation of the brokerage unit of Lehman Brothers has come to an end, 14 years and 13 days after the bankruptcy of its parent company helped trigger a free fall in the market and a financial crisis world.

U.S. Bankruptcy Judge Shelley Chapman in Manhattan closed the brokerage’s estate on Wednesday and awarded final payments to the trustee who oversaw its liquidation and law firm.

Over $115 billion has been paid out.

Join now for FREE unlimited access to Reuters.com

Lehman’s 111,000 customers received all of the $106 billion owed to them, and secured creditors also received full payments.

Unsecured creditors recovered $9.4 billion, or about 41 cents on the dollar. They were originally expected to recoup about 20 cents on the dollar.

Lehman Brothers Holdings Inc, the brokerage’s parent company, was Wall Street’s fourth largest investment bank before filing what remains by far the largest US bankruptcy on September 15, 2008.

Its collapse has sparked much debate over whether and under what circumstances companies should be allowed to fail.

Barclays Plc (BARC.L) bought most of Lehman’s US brokerage assets at the start of the financial crisis. The parent’s Chapter 11 bankruptcy plan was upheld in 2011.

Lehman’s disappearance taught that “failure of a major financial institution must be avoided, but history tells us it is inevitable,” brokerage trustee James Giddens said in a statement.

Giddens’ law firm, Hughes Hubbard & Reed, was awarded $424 million as final compensation for 14 years working on the case.

Join now for FREE unlimited access to Reuters.com

Reporting by Jonathan Stempel in New York; edited by Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

Share.

About Author

Comments are closed.