Lehman Brothers Bankruptcy Cost $1.6 Billion
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Lehman Brothers Bankruptcy Cost $1.6 Billion

March 16, 2012


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Three and a half years after initiating the largest bankruptcy in the nation’s history, Lehman Brothers officially exited the protection of the bankruptcy court last week, according to reports from Reuters. While the bankruptcy is over, the company will continue to operate for more than a year as it liquidates its assets and repays its creditors.

Sources report that Lehman, once a powerful Wall Street investment firm, will pay its creditors about $65 billion by the time the company has completely shuttered operations. The first round of payouts is apparently expected to total $10 billion and is expected to take place later this year.

Lehman filed a Chapter 11 bankruptcy case, and even though it is no longer under the court’s protection, its operations are limited to actions related to the repayment of creditors. At present, Lehman reportedly employs 433 people, compared with 735 during the height of its bankruptcy case and 25,000 when the firm was still fully operational.

The Biggest Bankruptcy Ever

Lehman Brothers’ bankruptcy included $639 billion in assets, making its filing the largest in U.S. history. The collapse of Lehman Brothers coincided with the housing market’s collapse and helped to touch off the global recession from which we are still recovering.

Lehman counted investors around the world, and many lost money when it filed its bankruptcy case. In addition to its considerable worldwide reach, Lehman’s bankruptcy is also notable for its cost to the firm: nearly $1.6 billion, according to CNNMoney.com.

Between court and legal fees, Lehman Brothers racked up nearly double what the nation’s next-largest bankruptcy filing cost (Enron, $793 million). But even the eyebrow-raising price tag is dwarfed by the sums of money Lehman owes to creditors.

It seems that creditors submitted claims totaling about $300 billion at the time of the bankruptcy filing. After three and a half years of deliberation and negotiation, the firm, its bankruptcy lawyers, its creditors and the bankruptcy court have come to an agreement that Lehman will repay creditors at between 21 and 28 cents to the dollar, depending on the kind of debt involved.

More Bankruptcy Matters to Come

Even though Lehman Brothers has officially left the court’s protection, its bankruptcy case will continue after a fashion, as the court attempts to settle claims and lawsuits related to the company’s collapse. That means that Lehman’s legal bills will also increase in the coming years, but likely at a much slower rate than they have so far.

The company, according to sources, currently has $35 billion in cash. It will raise the remaining money it needs to repay its debts by selling off assets, including a valuable real estate company it currently owns.

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