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Shareholders were the big losers when investment-banking giant Lehman Brothers Holdings Inc. (OTC: LEHMQ) collapsed in 2008.
Now, the bankruptcy lawyers are positioned to be the big winners. Lehman has already paid its bankruptcy advisers $533.5 million since September 2008, topping the half-a-billion-dollar mark in just 14 months, the investment-banking firm has revealed to the U.S. Bankruptcy Court in New York.
In mid-September 2008 - in one of its wildest and weirdest stretches ever - Wall Street entered a weekend awaiting a government bailout of Lehman Brothers and exited with Merrill Lynch & Co. Inc. agreeing to sell itself to Bank of America Corp. (NYSE: BAC) for nearly $50 billion, Money Morning reported. Lehman stunned investors by announcing it would seek bankruptcy in a bid to avoid a total liquidation after it was unable to find a buyer.
Alvarez & Marsal LLC, the restructuring firm that provided Lehman with current Chief Executive Officer Bryan Marsal, was the top fee collector, reaping $202.4 million in “interim-management” payment fees through the end of November, Bloomberg News reported. New York-based Weil Gotshal & Manges LLP, which acted as Lehman's lead law firm for the bankruptcy filing, $127.1 million, Lehman said in its monthly filing with the bankruptcy court.
By Nov. 18 of this year, creditors had filed claims totaling $824 billion - which is why Lehman is liquidating under protection of the U.S. Bankruptcy Code. According to the Bloomberg report, Lehman's payments to advisers haven't faced major challenges like those facing bankrupt automaker Chrysler LLC, which is using loans from the U.S. Treasury Department to wind itself down.
According to bankruptcy filings, Lehman Brothers and its affiliates right now hold $16.3 billion in cash, up from $15.8 billion at the start of the December.
When it filed its bankruptcy case in September 2008, Lehman had assets of $639 billion, making it the largest such filing in U.S. history. Major creditors include UBS AG (NYSE: UBS), the New York Giants and the Abu Dhabi Investment Authority.
News and Related Story Links:
- Bloomberg News:
Lehman Bankruptcy Advisers Get $533.5 Million
- Alvarez & Marsal LLC:
Official Web Site
- Weil Gotshal & Manges LLP:
Official Web Site
- Money Morning News Analysis:
With Buyout of Merrill, Bankruptcy for Lehman, Wall Street Plays "Let's Make a Deal."
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.