Its collapse helped to unleash the global financial crisis.Giddens was appointed to unwind the broker’s estate by the Securities Investor Protection Corp (SIPC), which insures customers of securities investment vehicles that go bust.“The system to protect customer property worked, and that is good news for the former Lehman customers caught up in the bankruptcy,” Giddens said in the statement.Lehman’s parent filed the largest Chapter 11 bankruptcy in history on September 15, 2008, with about 9 billion in assets.Lehman Brothers was once considered one of the major players in the global banking and financial services industries.It saw its start in Montgomery Ala., in 1850 as a dry-goods store and quickly grew into cotton and other commodities trading.At the time of its bankruptcy filing, Lehman Brothers held some 0 billion in assets diversified globally.
Lehman’s parent exited bankruptcy last year, moving ahead with a liquidation plan that will repay about billion to its own creditors, amounting to 20 cents and 30 cents on the dollar for various classes of creditors.
The linchpin to quantifying the estate’s assets was a deal announced in February under which Giddens allowed Lehman’s parent company to assert a .3 billion customer claim against the brokerage, and allowed a billion customer claim to Lehman’s European unit.
Both amounts were less than originally sought by the affiliates, freeing up a bit more money for other institutional customers.
The discussions, which involved a potential sale to Bank of American and Barclays, failed (vetoed by the Bank of England and the U. Financial Services Authority), and efforts by potential acquirers to secure federal intervention were unsuccessful. The repercussions were felt globally; the Dow Jones Industrial Average fell 500 points on the day Lehman Brothers declared bankruptcy.
Lehman Brothers assets, real estate holdings, and operations were quickly sold off to repay investors.
When these loans became illiquid, and the firm had no ability to pay back its creditors, Lehman Brothers experienced a credit crunch; it could no longer cheaply raise cash via debt issuance, and issuing stock under such conditions led to both dilution of shares and negative sentiment, which caused its share price to fall.