Monday, 24 January 2011

Lehman Brothers Is Still Struggling to Exit Bankruptcy

It was the biggest bankruptcy that California bankruptcy lawyers had seen in the history of the country, and 28 months later, there is no indication that those files will be closed anytime soon. Lehman Brothers has announced that it doesn't expect its bankruptcy plans to be approved soon. The company expects to have to pay out $60.1 billion to settle debts with creditors. It's a small amount, considering that creditors are owed about six times that.

According to bankruptcy lawyers for the company, Lehman Brothers expects to have a final bankruptcy plan in place before the end of 2011. Creditors, who have been waiting in line for the payouts, will now have to wait until the bankruptcy plan is approved. Until a bankruptcy court approves of the plan, no payout can be made to creditors.

The complex mess that Lehman Brothers has found itself in has meant more delays as the company tries to close the door on its bankruptcy, which some believe was one of the triggers for the current recession. Many creditors oppose the plan. They include a group formed by billionaire John Paulson, which in December offered a rival liquidation plan for Lehman Brothers to emerge from bankruptcy. According to John Paulson, the bankruptcy plan at Lehman Brothers offers no advantages to bigger creditors than others.

There are approximately $369 billion worth of creditor claims against Lehman Brothers. A federal judge is likely to allow creditors to pursue $322 billion worth of these claims. Besides, there are civil claims that are still unresolved.

Lehman Brothers filed for bankruptcy on September 15, 2008. It was once the fourth-largest investment bank in the U.S., and the bankruptcy filing was the biggest in U.S. history. The company is currently suing J.P. Morgan Chase & Co., Barclays and others in order to recover tens of billions of dollars with which it hopes to pay creditors.

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