Lehman out of bankruptcy
Failed financial giant to repay $65B to creditors in April
Lehman Brothers Holdings Inc.’s record $639 billion (U.S.) bankruptcy ended on Tuesday, clearing the way for the failed financial services giant to start distributing about $65 billion to creditors starting on April 17, court documents show. Lehman has said that it expects that first group of payments to creditors to be at least $10 billion. Lehman, now a small fraction of its former size, collapsed on Sept. 15, 2008, with $639 billion in assets, rocking the foundations of the global financial markets and catalyzing the Great Recession. Exactly 1,268 days later, the legal end to the case enables Lehman to start paying back the creditors, which include Wall Street firms like Goldman Sachs Group Inc. and hedge fund investors such as Paulson & Co, which together had asserted more than $300 billion in claims.
But Lehman Brothers will live on for some time as a sliver of its former self, selling assets and continuing to operate in its midtown Manhattan headquarters, where it is down to two floors.
The company, whose assets include $35 billion in cash, is due to make a second payment in September and then will continue to make periodic distributions in the future as it sells off its remaining holdings.
During bankruptcy, Lehman sold assets, settled claims and negotiated a plan with its investors on how much to pay back each class of creditor, pitting it against its one-time trading partners, and some of them against each other.